Okay. I keep getting questions from friends asking if getting a credit card is good or bad? First of all, before you google your favorite credit card, try to imagine how much money you can get, etc. – understand that it is a simple concept that can make or break the way your credit will be.
Credit is “imaginary money” (
don’t quote me on this) that has been provided to you to make any necessary purchases – given that any money you borrow, you must pay back. It’s like having miniature loans. You use the “credit” to purchase your items, which the credit company gives you about 1 month to pay off. Purchases made in the statement month (see the terms and conditions of what a statement month is for your credit card company) will be required for you to pay that following month.
What I would recommend starting off with, is applying for a joint credit card with your parent at your current bank. This would help with building up your credit (if you don’t already have any) and help you learn more about the card as you use it.
Those who already have good credit, I recommend to sign up for any cards that can offer rewards. If you can afford the yearly fee, more power to you. Free is always good for me, so I like to stick will those credit cards. Theoretically, you are going to spend the money anyways, why not get something back instead of just giving your money away by paying cash or debit?
Rewards can involve money back, gift cards, free plane tickets, discounts, or even vacations!
For those who have bad credit, don’t worry! There are credit cards that support applicants with bad credit. You can keep track of your credit by downloading the Credit Karma App (sorry no link, they can pay me to do all of that) and monitor the numbers. Start now by only spending what you have.
This brings me to my next point – DON’T SPEND THE MONEY YOU DONT HAVE. Yes, there are times where we may have to put a bill or two on the card where we might have to wait for the money next paycheck, which is fine. As long as you pay within the statement month, you are in the clear. Most companies will remind you when your next payment is so that you can schedule payments accordingly. There are times where I feel people will not have self control and will spend all of the credit they have – and that is abusing the credit card. That’s just like borrowing something and not being able to give it back.
Keep in mind, credit cards are not for everyone. Like I stated above, many people do not have self control. That is your decision. I’m merely stating the benefits of the credit card and how it can make your life a bit easier.
Be sure to pay it off in full every chance you get (to capitalize, spend only what you can afford) because this can build your credit to a very strong number. If you make the bare minimum payment, this is do little to nothing to those numbers. You might as well cancel the card after you pay it off because it tells you that you may not be financially responsible.
Be honest to yourself and figure out if you are ready for this type of responsibility. I knew at 18, I was going to get a card and start building up. This gave me many options for my future (present now) to purchase and car and a home.
You can say that credit can also a form of trust. A person (company) is trusting you with there money to use to pay for whichever you desire, hoping that you will pay them back. To continue with the imagery, this person will be nice and not charge you anything if you pay back in full, within the statement month span; however, they will charge interest every month you don’t pay and their trust for you will slowly decrease. The more trust you have and then better you start paying this person back, you slowly start to accumulate a reward for your efforts.
Build trust and Understand your limits.
Anymore questions? Feel free to reach out to me at anytime! I’m always willing to help and give advice.