I recently got my first credit card, and I am hyped. I realize that not all international students are used to credit cards because either our countries don’t use them, or we have never owned one independently. So here’s a cute, little post about credit cards.
Why use credit cards in the first place? Well, my personal reason is the cashback. I am using a student credit card from Discover that gives me a certain percentage of cash back on purchases that are typical to students like grocery, gas, Amazon, textbooks, and certain restaurants. I also get cashback for maintaining a certain GPA. I am finally getting rewarded for being a nerd. My time has come. For students who are considering employment in the United States after graduation, companies might want to check your credit score as a measure of your reliability and responsibility. Certain car dealers also check your credit score if you buy a car from them. Same goes for renting or buying apartments.
You need a good credit score to get a good credit card, and you need a credit card to build a credit score. I know, wild! So your first credit card will probably not be very fancy, and it will most likely have a low credit limit. Mine has a $1000 limit per month, which is more than enough for my expenses.
Before you get a credit card, do your research. I would recommend figuring out your budget first so that you don’t max out your credit card every month. Look at the Annual Percentage Rate, which is the interest rate on your card. You can mostly avoid this interest if you pay your bills on time. However, it is still an important factor. Compare credit cards and the benefits that they offer. For example, if you fly a lot, you might want to get a credit card that offers travel benefits rather than one that offers cash back on Amazon. Check if there’s an annual fee, and if it’s worth it.
Pick a card that most fits your needs, but bear in mind that you will have to start small.
When you get your credit card, do not think of it as an additional income. You will have to pay for the money you spend. It is not “free money.” To maintain a good score, do not max out your card. I have done some intensive research and it looks like 30% is a good amount to spend on your card. My card has a limit of $1000, so I try to spend less than $300 every month. Pay your bills on time to avoid paying interest and a bad score.
I hope you have a good credit score. Happy smart spending!