Why should you care about credit cards?

If you’re here, you’re probably a new student to the United States and are still understanding how things work around here. One very important thing for you to realize when you are new here is how credit works and how you can build a profile which will support you once you graduate and take up a full-time job.

Credit score is a rating credit agencies give you on the basis of parameters listed here.

Why should you bother getting a credit card?

Think of your day-to-day purchases which you anyways have to make such as groceries, food, utilities, etc… and how you can maximize on those. Just as an example, payments at grocery stores can normally earn you anywhere from 1 – 5 % cashback or 2 – 5x in points (redeemable towards travel/cashback).  So maximizing on your cash-backs/rewards towards your daily spends is a good way to get back some of what you have spent.

Is it legal ?

Yes ofcourse! Banks offer cards to people for ease of payments and they collect a small transaction fee from the merchant where you swipe/scan your card. It is completely legal as long as you make normal purchases – and not something that is obviously illegal / complicit to illegal activities.

Why not leave my money in a savings account and let it make me money at no expense?

Unless you have large sums of liquid assets / cash to deposit in high interest checkings/ savings account, you actually stand to make more spending normally on a credit card than depositing it.

I make more money through my investments, why bother with credit cards?

Credit cards are NOT an avenue to make money and never should be misunderstood as a primary source of income/free-cash. They are meant to supplement your general spends and reward you for using a service/product offered by the various banks. The sign-up bonuses are great to get but should not be the sole motive of getting a card with a bank – a lot of planning and decision should go into the process.

Example of when to get a card

Let’s assume you are a homeowner and are planning to make some changes to your house. The renovations are going to cost close to $5,000 and you are in full capacity to pay the amount. Why not get a card with a good sign-up bonus that compliments the spend as well as gives you maybe a free weekend trip for the family to an exotic location.

In a completely opposite end of the spectrum example, you are a student who has to buy groceries often and end up spending $100-$200 a month, wouldn’t it be nice to get a card that has a sign-up bonus (which gives you maximum value) for a very attainable spend of $500 in three months (completely possible).

To each their own and their preferences as well as value derived from those expenses. We just recommend you research as much as you can before you get invested in owning a credit card and see if you are able to keep up with the payments and manage it well.

We never recommend you get multiple credit cards in one go as that can hurt your credit score but rather advice you take it slow and steady. Remember, DON’T buy things you don’t have the money to pay for – and you’ll do just fine.