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Spending

The Advantages of Having a Credit Card
Author: David Morris


We've all heard about the evils of owning a credit card. A lot of college students just like us get into trouble by not watching how they are using their credit cards, and they can end up in a serious debt situation. However, not everything about credit cards is evil. In fact, there are many good things about owning a credit card. They can provide life-long benefits, as well as serve as a good emergency cash source should you run into problems.

The biggest advantage of a credit card in the long term is that by owning one and using it occasionally (and paying it off every time), you will build up credit. Credit is the system used by car dealers, banks, and mortgage lenders to determine whether or not you are eligible for a specific loan. Much of the credit system is based on your yearly income, and other pre-identified risk factors, but a significant percentage is also based on your past history. As college students, few of us have credit histories, and, while this means there aren't any big red x's next to our names, it also means there's no checkmarks either. Owning a credit card will be noted on your credit record, and if you use it consistently (and pay it off, of course), it will make it much easier for you to get a loan, be it for buying a car, a house, or even starting your own business.

The next advantage of owning a credit card is the fact that it can be used in emergency situations. Say, for example, there is a fire and your apartment burns down. Sure, you'll be able to get your insurance back on it, and that will come through for all your possessions, but where are you going to stay that night? Sure, you might be able to crash with a friend, but what if your friends aren't home? Owning a credit card would allow you to get a hotel room for the night, and something to eat in the morning, even if your cash was lost, or pay day is still a couple days away. A credit card can serve as an emergency stopgap measure to hold you over until you get income you've been waiting on.

In addition to these advantages, credit cards are convenient. They allow you to purchase things in advance of having the money (never a good thing, but sometimes a necessary one), and many of them offer rewards (airline miles or some kind of cash back program.)

Credit cards have both positives and negatives, and you should talk with someone with more experience before you get one. That being said, however, as long as you don't abuse the card, it can be a good way to earn credit.

 
 
 

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