Wise Startup Blog

Now this is for all of you college students and recent college grads…Make sure you get a credit card as soon as possible. Optimally, you should get a credit card while still in high school. You will most likely need a parent to cosign with you, but it is important to begin building your credit as soon as possible.

The earlier you start building credit the better, as that is one of the factors that determines your FICO score. Your FICO score is a tool lenders use when evaluating you for credit cards, loans, etc. The better your FICO score, the better terms you are likely to receive (ie lower interest rates, higher acceptance rate in ‘premier’ cards/accounts).

When you graduate college, and begin your job you will need to have credit. Some of the expenses that will require credit:

• Credit Cards! (They make paying bills 100% easier)
• Car loans
• Apartment (requires credit check)
• Cell Phone (requires credit check)
• Refinancing student loans

Credit cards also provide a number of benefits over cash and debit cards, commonly referred to as check cards. Check cards are like a check in that it deducts straight from your checking account, but also provides a means to track your purchases electronically. Debit cards, however, do not provide protection for purchases made fradulently with your debit card. Credit cards can carry upwards of $100,000 of purchase protection to protect you against fraud.

Additionally, credit cards can provide great rewards and cash back benefits. A number of Citi cards allow you to earn 3% on purchases from Grocery stores, Gas stations, and Drug stores, and 1% on purchases elsewhere. Say you spend $50 per week on groceries, so over the year you would have spent (50 x 52 weeks) and would have earned $78. $78 may not seem like much, but that is just groceries, and you will earn 1% on all of those mall shopping sprees, and after all, this is all for FREE!

When dealing with credit cards, you must remember to always pay off the balance in full. Never leave a balance or simply pay just the minimum. If you can not afford to pay off the balance, either return whatever you bought or pay atleast the minimum.

Now that you have an introduction on credit cards, I hope you will start looking for the right card(s) for you. In a future segment I will focus on what card is right for you, and where to find it.

Please check out FatWallet Finance for more information on credit cards.