Let’s Talk Credit Cards

For many students, one of the scariest financial challenges of adulthood is often the concept of credit cards. Credit cards have a bad reputation for being the cause of big bills and a lot of debt, which often causes a lot of young adults to avoid them entirely. However, if you implement responsible spending practices, they could be an advantageous financial tool that may greatly benefit you in the future.  

Debunking Common Myths

Unfortunately, there are quite a few commonly believed myths about credit cards, and it’s important to have accurate information when you begin to enter the world of credit. Here are some truths behind a few commonly mistaken credit card beliefs:  

Myth: Credit cards are inherently bad 

If used responsibly, credit cards could be valuable financial tools that help you build credit. Credit may be necessary for taking out loans and aiding major purchases in the future, like shopping for a vehicle, applying for new credit cards, or buying a house. 

Myth: You don’t need to worry about your credit score until you’re older

Building a credit score takes time, and it could be advantageous to begin working on your credit as soon as possible. You can begin applying for credit cards at 18, and starting early gives you more time to generate your credit score. 

Myth: You have to have credit to apply for a credit card

This one is only partially true. Yes, it is true that for most credit cards, they will check your credit score to see if you will be approved or not, which means you need to have good credit. However, there are starter credit cards for young adults or people who don’t have great credit. These cards exist because banks understand that to enter the credit system, you have to be able to start somewhere. 

Smart spending tips 

While credit cards can often be advantageous, they could also present potential risks if they aren’t used responsibly. Having overdue balances, making late payments, and spending more than what you can pay back could lead to bills and debt that are difficult to pay off. Here are some tips for spending responsibly and avoiding credit card debt: 

• Pay off your balance every month
• Know the terms of your credit card (potential fees, interest rates, billing cycle dates)
• Use your card as a budgeting tool
• Use your credit card for needs, not wants
• Keep your spending under 30% of your total credit limit
• Avoid maxing out your credit card

The Bottom Line

 Being well-informed is crucial when thinking about applying for a credit card. Learning about credit can be scary and overwhelming, but there are plenty of resources that could help guide you and options for getting started. While credit cards have a reputation for being risky, if you are strategic and intentional with how you approach applying for and using one, it could be a helpful tool for managing your expenses while also building credit for your future financial plans.