Maybe the stories started in High School in your junior or senior year. Your parents would tell you all about the evils that could come from those little plastic cards.
If you were really unlucky, you may have gotten a final lecture as you moved into your dorm room. Despite your parents’ honest intentions, credit cards can be really good for you, if you don’t go on a mad shopping spree right after.
The key is responsibility. As young adults it is a wise decision to start building your credit, and a credit card is a great way to do that.
Dr. Nicholas Mangee, an Economics Professor here at Armstrong, gives a bit of advice to students who are considering taking the big step. “It is important to take steps towards financial independence early on in adulthood. Establishing and responsibly managing a line of credit will impact many future financial scenarios such as: auto, student, rental, and mortgage loan applications. Simply put, how you manage a line of credit will impact directly your ability and terms to borrow funds in the future,” Dr. Mangee said.
Of course having a credit card in hand may seem like holding some ultimate power, but it’s not the power you think it is.
Being given a $500 limit sounds like music to anyone’s ears. With that kind of money you could buy a new cell phone, make a trip to GameStop, and a probably buy a new wardrobe.
As enticing as that sounds, that wouldn’t be very responsible. As college students, credit cards should be strictly used for emergencies and necessities, such as gas and groceries.
That doesn’t sound like much fun, but if you follow these guidelines, you’ll be more likely to make your monthly payments without an issue.
At this point, you might be wondering how you can get your hands on this thin slip of plastic power without alerting your parents.
Dr. Mangee explains, “Many young adults open a retail credit line since they typically have lower spending limits and possibly no annual fee and, if paid in full every period, may still help build some degree of sound credit,”
“However,” he went on to say, “they can have very high interest rates if not paid on time, and come with very low minimum payments. And, be careful since you do not want to have numerous credit cards. It would be wise to just have one possibly two.”
John Hunter, a Criminal Justice major said, “I got my card from Gap in February. It was a good and bad decision. They started me off at $400 and I could easily pay the money back. I didn’t get sent to collections if I was late either. Eventually they bumped me up to $700. The hardest thing to do was pay it off when I had to go home over the summer.”
“Your credit history stays with you through adulthood, so be responsible. Being a sound borrower is commensurate with healthy overall financial practices – pay all of your bills on time and save, save, save,” Dr. Mangee expressed with a serious tone.
So yes, maybe mom and dad were right, having a credit card can be disastrous, but it can help you buy your dream car or home after you graduate. And if you pay off your bill on time, then you can treat yourself to a few other treats too.