Ask an Expert: How a Credit Card Can Help in College

Photo (cc) by schwglr

I review dozens of credit card offers each week to find the best deals. Check out more on our credit card page.

A young reader recently wrote in with this question – one that might surprise a few parents…

I’m a 21-year-old college student thinking about moving out and buying myself a car. I did some traveling before starting college, and my bank account has been repeatedly wiped out from various trips overseas. Now I need to think about replacing my 1990 Honda and finally moving out of my parents house. I have about $2,000 in savings and was planning to use my summer savings to pay for a newer car in cash, somewhere around $4,000. I am wondering about opening a credit card for the first time – should I go for it for either of these things? Or should I just stick with cash as much as possible?

I bank with BECU, I know they have a great credit card for members, so what is your advice on choosing a card for someone like me? Thanks so much!

– Danielle

It sounds to me, Danielle, like you’re on the verge of gaining some financial maturity – graduating soon from college, moving out of your parents’ house, and giving up on traveling beyond your means.

At the same time, you’re wondering if getting a credit card is the responsible thing to do, or if you should “stick with cash as much as possible.” My answer may surprise you.

I think you should get a credit card – but not to finance new purchases. I love the fact that you’re currently paying cash for your purchases rather than taking out loans. It’s a great habit for a young adult to stay out of debt as much as possible. As so many of your classmates will learn, once you start accumulating credit card debt, it’s very difficult to pay it off.

Why should you get a credit card?

Using a credit card responsibly is one of the most important ways to build a strong credit score. This will lower your car insurance rate, help you qualify for a mortgage in the future, and even pass security checks necessary for some jobs.

Having a credit card helps to improve your credit report’s payment history, length of credit history, and the types of credit used. Each of these are critical factors that make up your FICO score. That said, it’s crucial you continue to buy only what you can afford. That means always paying your balance in full and on time. If you think that you’ll have a problem doing so, stick with cash.

What kind of card should you get?

BECU, your local credit union, does offer its own credit card that looks fine, if a little plain vanilla. If you wanted to try something else, I would go with the Citi Forward card for college students. It offers 5 “ThankYou” points for every dollar spent at restaurants and on entertainment, and 1 point per dollar elsewhere. These points are worth as much as 1 cent each toward a variety of rewards including travel and gift cards.

By taking your first cautious steps into the world of credit cards, you can move forward with your personal finances while improving your credit score.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
New Ways to Save Money on Insurance of Every Kind
New Ways to Save Money on Insurance of Every Kind

Tech startups are making it easy to find the best rates for all kinds of insurance policies — and get covered fast.

9 Free Things That Used to Cost Us Money
9 Free Things That Used to Cost Us Money

Not everything is getting more expensive.

3 Bank Accounts With Perks for Customers Age 55 and Older
3 Bank Accounts With Perks for Customers Age 55 and Older

These checking accounts offer exclusive discounts and other perks — including interest — to older customers.

What’s the Difference Between FICO and VantageScore Credit Scores?
What’s the Difference Between FICO and VantageScore Credit Scores?

There are lots of credit scores out there, but if you’re keeping an eye on your credit, here’s the one to watch.

5 Tax Breaks That Retirees Often Overlook
5 Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

10 Things You Should Never Do With Bleach
10 Things You Should Never Do With Bleach

Does the pandemic have you reaching for bleach more than ever before? Learn the ins and outs of using this powerful disinfectant.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.