As soon as you turn 18, or as soon as you possibly can, you should get a credit card. It may not seem like an important thing to do, but it truly is a useful thing to do, and it is something that you will thank yourself for years from now. While a credit card seems like a very intimidating “adult” thing, when used properly, it can and will become an intrinsic part of becoming financially independent. Getting a credit card can often appear to be a challenging process, but with diligent research, getting a credit card, especially as a student, can be quite simple. Many banks have credit card offers designed specifically for students, with no annual fees and with special rewards or bonuses. It really is worth looking into for students who are in or going into University.
What is a Credit Card?
A credit card, which is usually issued by a bank, allows you to basically borrow money from that bank to make purchases. With the condition, of course, that you pay back the money plus any additional fees and interest by the billing date. Once a month, your credit card issuer will send you a bill, listing your purchases and showing how much you owe. After the bill is sent to you, you will have around 21 days to pay back the money you owe, preferably in full so you don’t begin to accrue interest on your purchases. Credit cards also have what is called a credit limit, which is the maximum amount of money you can “borrow” every month, and the longer you have a credit card, the more you can increase your credit limit over time.
Credit Cards vs Debit Cards
The main difference between credit and debit cards is where the money is withdrawn from. When a purchase is made using a debit card, money is withdrawn from your checking account. Debit cards can usually be used everywhere credit cards can be used. On the other hand, when a purchase is made using a credit card, the money is “borrowed” from a line of credit, or the credit limit currently in place, that you will have to pay back eventually.
There are many perks to having a credit card, so long as you use it responsibly. Often times, you can get one-time bonuses by just signing up, like receiving bonus rewards points. With some credit cards, you can also get cash back on purchases. Having a credit card also makes it easier to avoid fraudulent purchases, because unlike with a debit card, you can notify your credit card company and not lose any money by not paying for transactions that you didn’t make.
Most importantly, getting a credit card as early as possible is essential for building a good reputation for yourself and your future by establishing your credit score, which is really important for your financial future. Learn more about how to build a good credit score here.