Credit Cards

"Credit Cards", November 2007

I remember when I was younger how much of an allure a credit card had. It was a symbol of status, of wealth, and free spending. However, as I got a little bit older, I realized that there were rules to having and using a credit card. For those of you who are thinking about getting one, do you actually know what they are? A credit card is a little piece of plastic that can both ruin you and help you out. As the name implies, it can help you establish credit. However, it can also help you destroy whatever credit you have.

The user establishes an account with a credit card company. From there, a spending limit is decided (usually by the company, especially if it's your first card). For the most part, banks are the ones that issue the credit card. Then the user spends as they please; groceries, clothing, electronics, ebay items, whatever. The customer does not pay for the purchase at that time; everything gets tabulated to be paid later. At the end of the payment period, a bill comes with all of the purchases on it.

There will be an option to pay a minimum amount. This is the first mistake someone makes. If you do not have enough money to pay the entire amount on your credit card, you should not be using it, period. Every time you do not pay the full amount, interest is added to what you owe; sometimes as high as twenty percent. This is the real trap for everyone; the allure of not having to pay all at once. A large bill is created, and thus someone ends up more and more in debt because they don't pay it off.

See what I meant about ruining your credit? This is what happens when you go into debt. Your credit gets ruined. You want to avoid this at all costs. Your life is officially over.

Thus, you always pay the full amount on the bill. If you continually do so, then your credit rating will increase. In addition to this, certain credit cards will give you perks; such as extra bonus points, free stuff etc. You will also be able to increase your credit limit.

I got my first credit card at about eighteen, and my second one about a year and a half later; I guess it's been about four years, now. I have always paid the full amount. And my credit limit on both cards has increased a few times. I am content; I am establishing some credit for myself, and I also am avoiding those pesky service fees from the bank. I am working on being a grown-up. Yay me.

If you don't think you are the type of person who is able to pay off the full amount each time, you should not get a credit card. I have heard recently of credit cards that you can dump money on to (MuchMusic has one [which is a whole other creepy, annoying story…], but I'm not sure about anyone else). From what I understand, it works similar to a gift card: you put on a pre-determined amount, and can spend how you want and when you want. This is probably a better idea for some than a full-out credit card, but it still will have its own risks.

I hope all of you who were signing up for the McMaster Mastercard in the student centre the last few days know what you were getting yourselves into.