Credit cards have a good and evil side to them. They are not for someone who doesn’t know how to budget and is a reckless spender.
Credit Cards: The Good
Credit cards help to build your credit score and the sooner you start doing this the better. Having a good credit score is important since, along with your income, it will help you qualify for different types of loans and at a lower interest rate. When you turn 18 years old you can apply for a student credit card. To qualify you need to have an income or be enrolled at a college or university. Now it’s not enough to just have a credit card to build your credit score. You have to use the credit card properly. To increase your credit score pay off the monthly balance each month. Make sure you have the money in your account, before using your credit card. If you only pay the interest each month or miss payments then your credit score will decrease.
There are numerous options from banks for credit cards with no annual fees and a low interest rate. Also, credit cards almost always have some type of reward or incentive program attached to them such as cash back or points. Look at the perks offered by Simplii with their Simplii Financial Cash Back Visa.
As you grow older and increase your income there will be more credit cards available for you to apply for. These credit cards offer more and better benefits and perks. Make sure you still pay off your monthly balance each month.
Credit Cards: The Bad
The BIG WARNING on credit cards. I highly suggest you only use a credit card if you have the money in your account to pay it off right away. You should never carry a balance on a credit card and never just pay the minimum amount. By paying the minimum amount each month it will take you a very long time to pay off your credit card debt. Also, you will be charged interest on the debt you owe further increasing your debt. So, I can’t stress how important it is to have the money in your account first before using your credit card.
It’s very easy to lose track of your spending with your credit card so it’s a good idea to track your purchases with an app on your phone. Always make sure to check the credit available for an accurate picture of what you’ve spent, not the account balance. The account balance takes awhile to update and does not usually include recent transactions. So, take your credit balance and subtract the credit available to have an up to date picture on how much you owe.
Use a credit card to GROW your credit score, NOT to put you in debt.
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