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Perks and Drawbacks of Getting a Credit Card

Are you thinking about getting a credit card but aren’t quite sure what the benefits and drawbacks are? Are you not even really sure why having a credit card is important? Don’t worry–HC @ CNU’s got you covered!

Earlier this year, I decided to take control of my finances. One way in which I did this was through researching and getting my first credit card. I’ve already learned so much about the importance of–and dangers of!–credit cards, so I’m here to share my newfound knowledge with you. 

“Why should I even get a credit card?” you may be wondering. Why, let me tell you, dear reader! Obtaining a credit card has some real perks:

Build Your Credit

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Many college students don’t think about building credit until after graduation, but after graduation is when you’ll need to have good credit to lease your first apartment, buy your first car, and get affordable living loans. Starting to build credit during your college semesters is always a great idea. When you build up your credit through regularly and properly utilizing a credit card, a whole new world of financial possibilities opens up for you. Having a good to excellent credit score means you can rent nicer apartments, get better interest rates, have access to larger credit lines, and get approved for more loans.

Get Rewarded

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Nearly every credit card has some kind of rewards system, whether it be air miles, cash back, or store discounts. Basically, the more you use your credit card, the more free things (and sometimes free money!) you’ll get. However, with great rewards comes great responsibility–keep your credit utilization rate under 30 percent to get the most out of both your rewards and your credit score.

Teaches Financial Responsibility

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When you have a credit card, you have to use it responsibly. There some set rules for properly utilizing your credit card, such as making payments on time, using the card at least once per month, and spending under 30 percent of your credit line. When you follow these rules, you teach yourself about financial responsibility. Learning financial responsibility in college is incredibly important because you’ll need to budget your income and assets properly after graduation in order to support yourself.

Now that you understand the perks of having a credit card, you need to know the drawbacks:

Can Go Into Debt

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When you spend money on your credit card, you’re borrowing that money from the credit card company. At the end of the month, you pay back that money. If you end up spending more than you can pay back, you go into debt. Credit card debt quickly becomes a deep hole; many credit companies charge cardholders high interest rates, and some credit companies charge interest daily or weekly on missed payments. This means that you can quickly end up owing way more money than you actually spent. Thus, it is incredibly important to only spend what you can comfortably pay back in-full at the end of the month.

Can Lower Your Credit Score

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Like I mentioned earlier, using your credit card responsibly is a great way to quickly raise your credit score. Conversely, using your credit card recklessly is a great way to quickly ruin your credit score. If you don’t pay off your minimum balance every pay period, use more than 30 percent of your credit line, irregularly use your credit card, or apply for too many credit cards at once, your score will drop drastically. Sadly, it is much easier to ruin your credit score than it is to build it, so you must be careful with how you use your card.

There you have it! In a nutshell, these are the basic perks and drawbacks of having a credit card. Have any questions? Drop them in the comments below!

Adelaide is a senior at CNU pursuing a BA in English w/ an emphasis in writing. After graduation, she plans to become an Editorial Assistant in Manhattan. In her free time, Adelaide loves reading books, playing with her two wonderful cats, and spending time with her grandpa.
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