Financial Wellness Tips
Credit cards...what's the deal?
Building credit is a necessary part of making large adult purchases like a home or a car. Credit cards can be very confusing, and they can get you into a lot of debt if you aren't careful.
When you apply for a credit card, the bank will approve you for a certain spending limit based on your income; this might be as little as a couple hundred dollars or much much greater. Once you have a credit card, there are a lot of different ways to approach using it. Some people treat it as emergency funding, others use it for everything, regardless; you will have to pay whatever money you were given back, plus interest. The interest can snowball quickly, and some people find themselves unable to pay it all back. To avoid credit debt, it is best to open a credit card when you feel stable and ready to start "building credit". Building credit refers to the process of using your card, paying it off, and the bank giving you a score out of 800. This score is often used to vet you when applying to live in an apartment, or receive a loan to purchase something large.
As a young person, there is no rush to build credit. If you believe in your ability to responsibly use a credit card, it can be valuable to get one and work on spending a bit of money on it, and paying it off in full every month. This is best to do when you are settled into regular work and you receive a regular income.
It is good to learn a bit about credit cards as a college student, but you do not need to rush into opening one until you are ready!