By: Brooke Foundas, Columnist
Views expressed in opinion columns are the author’s own.
It’s time to stop being afraid of credit cards.
From college student to college student, here’s why getting a credit card in your early 20s isn’t as risky as you may think. Disclaimer: I’m no expert on credit cards and I’m not here to tell you that you should disobey your parents and apply for a credit card if they are against it. I’m just here to tell you that credit cards are not as scary as adults make it out to seem as long as you’re responsible.
I am a senior at Towson and have an off campus apartment but it is under my parent’s name. This means that the apartment will only affect their credit scores and not mine since they were the ones to cosign for me. A cosigner is an individual who can help you get approved for certain purchases like an apartment or a car because it ensures that the amount due will get paid.
When I eventually move onto graduate school, I plan to get an apartment within the next two years or so, but from my knowledge, it can be tricky to rent without a cosigner if you have a zero or low credit score, as the landlord does not have proof that you will be able to pay your full amount on time. Sure, they could just trust you, but allowing them to see your credit score is a significant indicator that you have paid your other expenses on time as well. This is the main reason that led me to get two credit cards, and this stems from my current goals for the future.
My parents have taught me everything I need to know about getting a credit card in my 20s and I feel it’s my duty to share it with you. They want me to understand where they went wrong early in life and turn it into a learning experience on what not to do.
- Do a self-assessment.
The first advice I can give you is that if you are not responsible with your money and not strict on deadlines, I suggest you look out for your future self and do not attempt to get a credit card. The only thing that credit card companies mainly care about is if you pay your minimum balance on time.
According to the director of national priorities of Consumer Action, Linda Sherry, a minimum balance is your credit card company’s policy on the lowest amount of money they require you to pay each month.
Sounds easy right? Wrong. Even if you only pay the minimum balance each month, it is likely that your interest will begin increasing as well. Interest is a percentage of money that costs you just for borrowing their money. The minimum balance and interest rate could be compared to your student loans. Even if you miss your deadline by a few minutes, your credit score will likely take a toll, and I can say from experience, it can be hard to recover.
- Don’t spend more than you have.
If you can not afford to pay off your maxed out credit card, refrain from spending it in the first place. For example, if you have a credit limit of $3,000, which is the maximum amount of money you are able to spend on your card, and you are considering spending $2,000 of it with $500 in your checking account, save yourself the pain and debt and do not spend it. Only spend what you believe you can pay off.
When you already owe the credit card company money, the last thing you want to do is increase your debt by also owing your bank or family members money as well. My mom talks about how the credit card industry is like a game. They don’t like it if you use your credit card too much but they don’t like it if you use it too little. At the same time, they don’t like it if you have too many credit cards and they don’t like it if you have too little.
- Limit your card usage to these expenses.
Many people are confused on what kind of expenses they should use their credit card for. I’ll be honest, for grown adults in their 30s plus, I have no idea what they use their credit cards for. Christmas or birthday gifts? Bills? Clothes? Mortgage? Like I said, I am by no means an expert on credit cards. What I can tell you is that it can be smart for college students to use their credit cards on these expenses:
- Large personal expenses
You can set most credit cards up to be taken automatically from your checking account to avoid missing deadlines. Bills including Baltimore Gas & Electric (BGE), Internet and cable are great great monthly purchases and I also use my cards to purchase groceries every two or three weeks.
For me, it’s personal expenses like getting my nails done or a haircut. These expenses cost between $50-$250. I like using my credit card for this because it is a consistent purchase, and it ensures that I will use my card that month to attempt to boost my credit score. Avoid putting small purchases like going for coffee on your credit card because it tends to add up fast. You wouldn’t want to owe the bank $200 worth of coffee, you’d rather owe the bank $200 worth of your phone bill because this is a necessary expense that must be paid, unlike grabbing something to drink everyday. Use your debit card to buy those items you like to treat yourself with.
Whether you decide to apply for a credit card or not, research as much as you can and acquire as much advice as possible. The best thing you can do is educate yourself and make a decision based on your own knowledge. I’m just here to help inform you that as long as you see yourself as responsible and looking ahead for your future while being able to limit yourself on spending money on unnecessary items then credit cards are not as scary as your elders make it out to seem. Sit down and have a conversation with them. Talk about your concerns and listen to their opinions. You never know what they can teach you.