Learning Credit Cards Is A Vital Part of Financial Literacy News


For many college students, college is the first time they make their own money and pay their own bills. Credit cards can be a positive tool for some, but could cause long-term damage to others. Several experts speak on credit cards and financial literacy.

Paul Rose is a psychology professor specializing in consumer psychology. He has published on topics such as impulse buying and frugality. In addition to being a professor at SIUE, he also occasionally writes for WalletHub, a personal finance website that educates readers about financial literacy.

Rose recently wrote an article for WalletHub on credit card reward strategies, but said there were more practical posts for students. He said that while credit cards can be a useful tool for students, they should be used with caution.

“Credit cards can be very helpful for students to start building a credit history, but there is a huge note to this that credit cards can also be used to destroy credit history. a person, ”Rose said. “If a student isn’t ready to use a credit card responsibly, it’s best to avoid it altogether. But if they’ve developed good habits of paying their bills in full on time, credit cards can be a very important tool in building a student’s long-term credit history.

Riza Demirer, a finance professor, said he recommends that students create a personal budget before considering a credit card. He said students should access their money flows in and out, and then create financial goals based on those numbers.

“I would start by creating your personal financial statements, then relate them to your personal financial goals, have financial goals like just in school, my goal is to get that grade, my [financial] the goal is to save a certain amount each month, ”said Demirer.

Rose and Demirer both said they recommend researching credit cards before choosing one. Rose said he recommends looking at credit cards that offer achievable rewards for students, such as a card that offers rewards at a lower price.

“For example, some cards will give you a bonus of $ 200 if you can spend $ 500 in the first three months. For some students, it is achievable. There are other cards that will give you, say, a bonus of $ 500 for spending $ 3,000 in the first three months. For some students this will not be achievable and unfortunately it could motivate the student to spend a lot more money than they normally would, ”said Rose.

Richard Beck, an accounting and finance graduate from Bethalto, Ill., Said he would characterize credit cards as a necessary evil. He said they’re helpful in helping build credit to get a loan for a house, but if students don’t understand interest rates, they could find themselves in trouble.

“[Students] will overspend or spend beyond their means, then you have to worry about repaying the payments. But on the other hand, it helps you build a credit score, which in the future can help you get approved for a home loan, ”Beck said.

Rose said college is a good time to develop good financial habits, aside from using credit cards. He said recognize how much fun it can be on the cheap when you are around people you love.

“Notice that at this point in your life you are having a lot of fun, even if you have very little money. If you look at life for the long haul, what you can learn in your college days are habits that can pay dividends with huge savings throughout your life, ”said Rose. “One of those lessons is having fun, spending time with people I really care about and doing things that often don’t cost that much. “

Beck said developing habits early and prioritizing what’s important to you are among the most important aspects of financial literacy, and college is a great time to start developing those habits.

“It’s about developing the mindset about your money. It’s just a matter of prioritizing what you think is important, ”Beck said.


Louis R. Hancock