You may be wary of credit cards, and with good reason. Your parents underscored the drawbacks and dangers of the little plastic card. "You'll get into debt," they'd say. "You'll have to pay enormous amounts of interest," they cautioned.
No wonder you're fearful of using, and let alone owning, a credit card. The truth of the matter is, credit cards are not all bad. Yes, they can be punitive when misused. But, in actuality, there is a plus side to using these cards.
1. They help you build your credit
Credit cards offer perks that your debit card can't. For one, they are a great way to start building credit, and establish a good credit score so you can eventually take out a loan. You can establish a good credit score by using your card wisely, i.e. making your payments on time, every month.
*Build good credit by using your credit card responsibly, and making your payments on time, every month.
2. They are good back up
Let's say you need to fill your car with gas for the week. You realize your checking account is running low, and you only get paid on Wednesday. You can put $20 in your car using your credit card. When you get paid on Wednesday, you make a $20 payment on your credit card. Your balance is now paid, and as long as you don't wait until after your payment is due, you will not have to pay interest.
*You don't always accrue interest on your credit card. If you pay off what you owe in full before your payment is due, you'll never have to pay interest.
3. They are good to have just in case
Credit cards are great for emergencies. You never know when your car will break down, or when you'll need extra money. Having a credit card to help you out of tough financial spots can prevent you from asking parents or friends to borrow money. Ideally, an emergency savings account would be great for these situations, but that's not always possible, especially when you're a college student.
*Having a credit card means you're never truly stuck.
4. Credit Cards Offer Rewards
Certain credit cards offer cash back and other rewards. Credit cards are another way to earn rewards on your purchases. There are many types of cards and rewards, and if you use your card responsibly, this is a great way to get some cash back on your purchases.
Where Can You Get a Credit Card?
The easiest place to get a credit card is from your local financial institution. I got my credit card from my credit union because I can make payments from my online banking. I always know when I have a balance, and how much I need to pay. When looking for a card, always look for a $0 annual fee, and low interest rates.