Credit Cards - 1

There are only two scenes in movies where they show credit cards - a scene where a shopaholic goes ham, and where the distressed shopaholic cuts them with scissors to show resolve. It’s treated like it’s crack or something - well, it kinda is. We were always taught of the dangers of credit cards, and are warned that they will ruin your life. It will, if you don’t use it right. I think the first rule of using credit cards is this - treat it like a debit card. Don’t use credit unless someone’s dying. For some reason we’ve made it cool to be `leveraged’, where the good ol’ American life is living off of debt. But it shouldn’t be that way, just, don’t buy things you cannot afford. I currently have about 5 credit cards, and I have had about 10. It is hard to manage them all, and I personally think it’s sort of ridiculous. But to some degree, if you put work into it, you can make the best of them. 

 

Whenever you can make your first credit card, make one. The credit system in the U.S. is weird so that you need a certain length of credit history for your credit score to be good. You don’t necessarily have to use it a lot, but you just need to have an old credit starting date. So basically use your credit card to just pay your monthly spotify subscription for 5 years, if you don’t like using credit cards. For foreigners, it’s hard to get a credit card because you don’t have a social security number. For international students, I recommend getting a job on campus (which is legal under F1 visa), which will allow you to get a social security number. I used to work as a resident advisor, and that’s how I got mine. 

 

A lot of banks won’t issue you a credit card, if you’re a young adult and have no money or anything. Some card companies used to have deals where they’ll give you one if you have a certain amount of money in your account (e.g. You were approved for Chase freedom unlimited if you had $15,000 in your account - but what young adult does?). Discover is known to give out credit cards pretty well, and they usually incessantly send you letters until you get one. But if all fails, look into credit unions of institutions you’re in (like your university, or your job), which will have a higher chance of getting you a credit card. You have to start somewhere, right?

 

Once you get your credit started, you can do other things, like finance for a car, or get a mortgage for your home, among other things. The obvious key to a good credit score is to never be late on your payments and keep your debt low. My way of doing this is to set a calendar reminder every two weeks to ``manually’’ pay my credit card balances. Why not take advantage of the useful technology? Because I think it helps me understand what I’m spending my money on. Also, by paying bi-weekly instead of monthly, I can avoid the `oh shit’ moment when a huge chunk is taken away from my account. We all know this boring stuff, now let’s talk about the fun stuff.

 

One of the fun `games’ you can play with credit cards is the rewards game. A lot of people do this, and there are a lot of dedicated websites for this (thepointsguy is my favorite), where they use rewards and bonuses to go traveling, and get cash back. Although this can be a lucrative, and fun way to handle money, it can be dangerous if you get swept by it. I have seen some people try to juggle 6 different credit cards they use for different occasions to maximize rewards. For example, they would use one credit card for restaurants, another for movies, and another for gas, and so on. I personally think that’s way too much work. Also, juggling that many credit cards you might miss the sense of how much you’re spending, and may overspend, which is something we always want to avoid.  Also, if your cards have annual fees, they can add up to a hefty sum. There’s also the trap of `spend x dollars in the first n months to get the welcome bonus’, which may make you overspend. What I do is have a credit card on my mind, but not get it until I have to travel, or have major expenses. Then I’d apply for the card 2-3 weeks prior, and use that card to pay for my travel or major expenses. This way, I won’t have to buy obscure gift cards or make unnecessary purchases to meet that minimum spending.