Using a credit card doesn’t have to result in debt but can help build credit to be able to buy a house or car in the future, according to BYU-Hawaii students.
Paul Mooso, an information systems senior from Indiana, said the only reason he’s using a credit card is to build his credit score. “When I finish school, I will be able to buy a house or car if I want to with my credit score.”
Bank of America’s Better Money Habits blog says a positive credit history “lets creditors know that you can be trusted to lend to.”
Mooso recommended other students get a credit card “so they can build credit and use it in the future if they want to buy a house or car. Also, flexibility on the amount of money spent is another advantage of obtaining a credit card.”
Makenna Haycock, a freshman studying special education from Georgia, said the main reason she obtained a credit card is for convenience. “It is inconvenient for me to bring cash all the time.”
However, David Waite, assistant professor of entrepreneurship, doesn’t recommend all student get a credit card. He said people who use a credit card tend to spend 15 percent more on average than if they don’t have one. “What we love about our credit card is convenience. When you’re walking in a store and you have cash, you are more likely to spend within your means. You’re not thinking about spending more because it is harder to pay cash than swipe your credit card.
However, as soon as she turned 18, Haycock said her dad told her to get a credit card “to build my credit score. My sister never got a credit card. She tried to buy a house, but they couldn’t because they didn’t have a credit score. So, they needed to wait.”
According to MoneyTips.com, another advantage of credit card usage is purchase protection. “As opposed to cash purchases, credit cards offer protection against vendor fraud and stolen items. You also have means for disputing fraudulent purchases made in your name.”
Credit cards can also provide a record of expenses, reports MoneyTips.com. A full record of credit purchases is provided monthly to the customer that “outline where your money is going.”
A good record of immediate payment for credit card debt will help build credit score, according to Haycock. She said, “If I owe $200 for the month, I pay immediately. Even though they say I only have to pay $20, the interest fees will add up to my debt. I see to it that I pay the full amount to avoid interest fees.”
Olivet Gasang, a senior majoring in psychology from the Philippines, said she was prompted to obtain a credit card. “I wasn’t planning to get a credit card until my flight to the mainland last year. I thought I might need immediate funds, and I didn’t want to withdraw from my savings account.”
Gasang said her credit card helped her a lot when she missed her flight last year. “The prophecy I received about getting a credit card was fulfilled. I was able to buy another ticket through my credit card.”
Using a credit card can also result in interest and fees, reports Cornerstone’s Practical Money Skills website. “Wise use of credit means understanding those costs and acting accordingly.”
Nonetheless, Waite said, “I’m not opposed as long as you’re responsible. You can get a credit card if you want because I don’t know how you’re going to get around with it.”
Haycock shared a misuse of credit card by one of her roommates who recently got one. Haycock said, “She used her credit limit all at once. She was like, ‘I have $200 in my debit card, but my credit card says I have $800.’ So she used her credit card to buy a ticket home. She’s already in debt.”
Aside from having a higher score, credit cards can also help users “earn a variety of rewards such as cash back, airline miles and discounts,” says Better Money Habits.
NOTE: This article's online publication was delayed because it was featured in the Jan. 2018 print issue.