How to Use Your Credit Card the Right Way
By Kia Robinson
When I was entering college, countless family members shared advice that they felt was imperative to me having a successful college experience. Of all the tips and tricks I received, a reoccurring warning was to stay away (far away) from credit cards – no matter how good the deal was. This suggestion was often followed by a horror story regarding credit card debt and how they have the ability to absolutely ruin your life. So I stayed away from them. I relied on my saving and my checking accounts to get me through college. Now, as a college graduate, everywhere I turn I’m being encouraged to get a credit card. The same people that told me to stay away from them are now helping me pick my first one and compare interest rates. So you can only imagine my confusion.
Here’s the thing: credit cards are not horrible. In fact, if used properly and responsibly, they can set you up for financial success in the long run. These last couple of months, I’ve learned a great deal about credit cards and how to avoid becoming the horror story someone warned their child about. Below are three important lessons I’ve learned that can hopefully help others who are trying to “adult” as well.
1. Your Credit History and Score Will Thank You
In order to borrow large sums of money in the future, lenders want to make sure you’re responsible. In other words, “Can we trust that you’ll pay us back?” One major factor in this decision to loan you money will be your credit score and your credit card history. Your ability to make payments in full (or at least the minimum balance due) and on time will help creditors determine if you’re worth lending money to.
2. Credit Cards Offer Rewards and Perks
One of the great things about credit cards is they often come with great rewards for just being a loyal customer. Some credit cards give you points to fly for free or cash back on certain purchases. Who doesn’t love free things?! In theory, if taken proper advantage of, sometimes you can earn money simply by being a credit card holder.
3. Emergencies Happen
Sometimes you just don’t have it and that’s the reality of life. Credit cards allow you to make purchases even if you don’t have the money right then and there. This is a convenient system if used responsibly. When not used responsibly, you can spiral into debt that you can’t afford to pay back or end up with a low credit score that will make it hard to get a loan for anything. A credit card is, by no means, an excuse to spend money excessively. Instead, it’s a way to borrow money you don’t have and pay it back over the course of a couple months. Essentially, you want to prove that you can be trusted to borrow the money and pay it back.
One of my first questions was, “What if I avoid a credit card all together?” While this is 100% possible, it also makes it a little harder to build a credit score. With no credit score, lenders don’t have proof that you’re responsible enough to comfortably loan you any money in the future for purchases like a house or a car. All in all, there’s really no need to be scared of a credit card. They’re actually very beneficial when used responsibly. If you don’t have one yet, I encourage you to get one. Speak with your bank, parents or anyone else you trust and discuss which credit card would be best for you and how to responsibly use one. Trust me, if you use it correctly, you won’t become that horror story your parents warned you about.
Kia is a recent college graduate that's simply trying to grasp the concept of "adulting". She enjoys hugs, quotes, a good book, and all things motivational. Her favorite book is The Alchemist and she can watch Girlfriends all day long.