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Credit Cards

Many people are right when they make the argument that college does not prepare you for the real world. Although going off and living on your own does teach you to take care of yourself without your parents by your side, there are some key things you probably will never learn until you are on your own financially.

One thing I have found that I never really understood until I was forced into the adult world was the importance of credit. We all understand how to use a debit card, just don’t spend more than you have. When it comes to building credit, on the other hand, and actually understanding what that means, there are common misconceptions.

Having credit is important because without it, you could find yourself in a financial pickle. The best advice I can give is to go out and get a credit card. And when I say credit card, I do not mean an American Express. Your American Express card, if you have one, should almost be thought of as your debit card. You can get amazing points from using it. The problem is that you have to pay the full amount back every month. So in actuality you are not building a solid credit line that could be used as a safety net.

Typically for a person who is getting their first credit card, the limit will be around $1,000. Over time, this limit will be raised. It is important to at least put a little bit of spend on your credit card every month and pay it off. This will help build a bigger credit line that can become very useful down the road. With a larger credit line, you can extend your financial means and be able to fund something that you may not be able to pay off for an extended time.

In sum, get a credit card as soon as you can. Don’t spend out of your means. Simply use it like you would use your debit card, and over time your limit will grow. This is a very valuable asset to have for unexpected expenses. Good Luck!