Money Smarts Blog

How I Established Credit and Boosted My Savings

Feb 15, 2024 || Tiffany O'Leary, Member

man and woman sitting at desk talking

I was 12 when I got my first debit card. I didn’t realize it as a kid, but later on, knowing how much money I had at any given time really forced me to think about my “needs” (like eventually paying for the gas in my car) versus my “wants” (like going to a concert with my friends).

I didn’t always make the right decision when it came to spending and saving, but through the years that debit card gave me a better idea of what I’d be up against as an adult. Budgeting, income vs. expenses, investing … who knew that little piece of plastic would teach me so much?

Spoiler alert: My dad, Jim O’Leary, is a Financial Coach at IHMVCU and has an unrivaled enthusiasm for financial literacy. On my 18th birthday, he had me visit him at work to talk about ways to start building my credit now that I was “officially” an adult. The first thing we did: set up a share pledge loan.

A who-what? Yeah, that’s how I felt too. Luckily, my dad is a pro at making sense out of confusing financial mumbo-jumbo and explaining things in ways that make sense to the average person. So, back to the question of what exactly is a share pledge loan?

Imagine you want to borrow some money, but don’t have anything super valuable to offer as a guarantee in case you can’t pay back the loan. With a share pledge loan, you could use the money in your savings as a backup plan — meaning, if you can’t pay back your loan, the financial institution can take ownership of those funds instead. So, let’s say you have $1,000 stashed away. You’d then be issued a guaranteed $1,000 loan using your savings as collateral.

Why would you want to do this? Well, sometimes it makes it easier to get a loan because it makes the credit union feel more confident knowing they have something valuable of yours if things don’t go as planned. (It might even get you a better deal on the loan because the bank sees it as less risky.) Because I was still in high school at the time, I used my share pledge loan as an opportunity to start building my credit history. My dad helped me set up autopay, which kept me on track (and on time) with all my payments.

Remember: Before you take out any loan, always, always, always make sure you can manage the repayment terms.


Being the good daughter I am, I made sure to tell my friends about the benefits of a share pledge loan (try working THAT into normal teenager conversation!). My boyfriend also decided to get one, and I’m proud to say we purchased our first home together last May as 21-year-olds. We didn’t even need our parents to co-sign since we both maintain good credit scores and have worked to build a solid financial foundation. 

In addition to building credit, share pledge loans come in handy during tax season to help maximize refund money, and they’re a great option for people wanting to pay down high-interest debt. However, if you’re someone who will need to access your money sooner than the loan term, you may want to check out different options to better fit your situation. Either way, check in with my dad or another IHMVCU financial coach for the resources you need to help reach your financial goals this year!

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