She Strengthens

Building Credit: A Smart Move for Young Adults

As a college student, I was bombarded with advice to get a credit card to start building credit. But, with a frugal upbringing and a habit of careful spending, I was hesitant. What if I forgot a payment? What about extra fees? And, most irrationally, what if it changed my budgeting habits for the worse?

A Turning Point

That winter, I took on a new role as program director for a community service program, which involved purchasing groceries for the program. This presented an ideal opportunity to use a credit card for large, reimbursable expenses, allowing me to build credit without overspending.

Navigating the Credit Card Landscape

With so many options available, I narrowed down my search by asking three key questions:

What Are the Hidden Costs?

When browsing credit cards, I was overwhelmed by the numerous fees and acronyms. To simplify my search, I focused on cards with no annual fee, knowing I wanted a card that would remain open for a long time. I also considered signing bonuses, which could provide a cash back reward for meeting certain spending thresholds.

What Will I Use the Credit Card For?

There are various types of credit cards, each designed for specific purposes. Since I didn’t need a low-interest or balance transfer card, I focused on rewards cards. I decided against a secured card, opting instead for a card that would allow me to build credit without the hassle of applying for another card in the future.

What Kind of Rewards Do I Want?

Once I narrowed my search to rewards cards with attainable signing bonuses and no annual fee, I had to decide on the type of rewards I wanted. I considered point-based rewards, such as travel or hotel cards, but ultimately chose a cash back rewards card with a designated rate for groceries and gas.

A Smart Choice

In the end, I selected a cash back rewards card affiliated with my bank, which offered 3% cash back on groceries and 5% on gas. This card helped me budget effectively, as I dedicated it to specific expenses. The constancy of regulating my credit card use actually improved my budgeting skills, providing a clear picture of my spending habits.

The Verdict

Building credit through a credit card can be a smart move for young adults. While it’s essential to be cautious and consider the potential risks, the benefits of responsible credit card use can be significant. By asking the right questions and choosing a card that aligns with your needs, you can take control of your finances and set yourself up for long-term success.