Swipe Away: Reasons to Use your Credit Card

by Jessica Hamilton, Lifestyle Writer

MODA finance article

 

Being a shopaholic should be reason enough for me to not possess a credit card. But recent articles in Self and The New York Times report that using a credit card is crucial for building a credit score to qualify for insurance policies, auto and mortgage loans and even jobs (hello real world!). Credit scores are three digit numbers generated by using information from your credit report, the history of your payments on borrowed money. Lenders, such as banks, use credit scores to determine potential risks produced by consumers borrowing money.

 

When I opened my first personal bank account, right before I started college, I was given a bright pink debit card and an orange credit card. It has been over a year now, and my credit card has yet to leave my wallet. Similar to most college students, I like knowing that when I’m spending money, using my debit card or cash, I can only spend what I already have. The freedom to swipe my credit card to purchase anything I like without actually owning the money freaks me out. I could easily rack up thousands of dollars shopping at Anthropologie alone.

 

Self reveals that 63% of young adults do not own a credit card, and only 40% of those who use them pay off their balance each month. Creditors suggest applying for a single credit card and using it periodically for small purchases. It is crucial to make these payments on time to create a positive credit score, which will allow you to borrow larger amounts of money in the future. Can you say post-college BMW loan?

 

On the other hand, if you already have student loans out, your payment history can contribute to your credit score. Making your payments on time helps build credit history, which will improve your score.

 

I know if is difficult to think too far into the future, especially about borrowing large sums of money when you can barely afford a pumpkin spice latte now. Managing a credit card adds a whole new level of responsibility to your financial affairs. If your dreams are anything like mine and you’d like to buy your own car or house one day, choose to use your credit card the next time you purchase a new piece of clothing, as long as you know you have the money ready to pay off the balance. This is the one time when it’s recommended to swipe.

 

 

 

 

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