I grew up fearing credit cards.
I was scared that they build up so much that you can’t pay them off, and you are just forever in debt. On top of that, I was scared that the fees are so high that you end up paying more than you started with! That is, if you can even pay it off.
Yes, this can be a reality, but it doesn’t need to be your reality! Learning to manage a credit card and build your credit in general can be very beneficial to your future. It is a great way to learn more about balancing your own budget and the world of finance in general. Educate yourself! Don’t get yourself into trouble because you didn’t do your research first.
If you haven’t started already, you need to start NOW! This is one thing I learned during my second year of college. A friend of mine was talking about her credit card, and the first thing I thought was, “wait, YOU have a credit card? Isn’t that a bad thing?” But, I soon learned that she was doing something very smart. I soon learned the benefits of building credit early and its importance.
Start NOW.
After I was approved for my first credit card, I was so confused why my credit score was so low when I didn’t have any late payments, or really anything for that matter. The time you have been managing any line of credit is calculated into your credit score. The more experience you have with managing your credit (and the more responsible you are), the better it will reflect on your score. My score was very low, but after about two years or so of minimal use, I saw great improvements! If you are in college now or about to start, make sure you have started building your credit for some before you embark into the real world. It will help you immensely!
Start SMALL.
Don’t expect this to change your life. It is NOT free money. It is NOT imaginary money. Think of it like this: would you spend money from your bank account that isn’t there? At least when you’re starting out, imagine that this money is just a reflection of your real-life savings account. Don’t spend what you can’t pay off! I used my card solely for gas money when I got my first card. I would pay it off on the same day I used it. You don’t need to use this card for anything crazy. Start small. You will be glad you did!
So, why should I start building my credit?
Well, first of all, a great credit score takes time. Like I said above, you need to prove that you are responsible to manage your credit. Credit scores can be seen as a reflection of you and your habits. Are you responsible with money? Can you be trusted? If you want to buy a car or a house in the future, you need to show that you are responsible to make the payments!
Credit cards come with rewards!
Look for a card that offers 0% for the first year and has cash back bonuses (many cards do)! My first card was a student card, so the cash-back rewards were limited to gas and food purchases. This was great for student use! The rewards are minimal, but it can definitely add up. Tip: use your card for your everyday expenses, and just pay them right off! It will definitely help you add up those rewards. The next card I opened was for my semester abroad in Spain. I needed something with a bigger line of credit and a card that would work internationally. I am SO glad I did this because I was able to rack up so much cash back! After booking a few flights to Paris and other parts of Spain, I had over $100 in cash back rewards!