Let's face it – stepping into the real world can be a
frightening thing. There's that whole job search thing, the stress of moving
out of your college apartment, and the strong chance that you're pretty
cash-strapped. Congrats, class of 2013!
With all that on your plate, odds are applying for a new
credit card is a pretty low priority. But believe it or not, there might be no
better financial move you could make in the weeks after college ends and real
life begins.
Here are five reasons you should open a credit card after
graduation:
1.)
“No credit” isn't “good credit”
Anyone that's ever waited too long to open their first
credit card knows that once you hit your mid-20's, those credit card offers
stop showing up in your mailbox and approval for a decent card becomes pretty
challenging.
Why? Because “no credit” doesn't mean “good credit”. If you
hold off on establishing credit after college, it's going to be much harder to
open up a credit card in your late-20's and early-30's, which is precisely when
you'll need established credit the most (think auto loans, mortgage approval, etc.).
Don't ignore credit until it's too late.
2.)
You're more likely to get approved now
that you're 21 or over
Most college seniors are at least 21 years of age, which
means it's easier for them to get approved for a credit card. This is because
the Credit CARD Act of 2009 makes it challenging for consumers under 21 to get
approved for a card without providing a co-signer or proving they have
sufficient income to pay a credit card bill each month.
After you turn 21, those restrictions let up considerably
and it becomes much easier to get approved for a card if you have a decent
credit score. And if you don't, you could apply for a secured credit card and
pay a small, fully-refundable deposit to get the ball rolling on building your
credit. It's a bit of a sacrifice at first, put you could end up paying a lot
less in interest rates in the long run if you kick-start your credit profile
today.
3.)
A lot of credit cards are free
The misconception a lot of post-grads have with credit cards
is that they cost money to carry. Fortunately, this isn't the case. Many credit
cards do not require annual fees, which essentially makes them freecredit cards so long as you're paying off your bill each month to avoid
interest.
If you're worried about the cost of a credit card, choose a
card without an annual fee, keep your spending in check and pay your bill in
full each month. It's really that simple.
4.)
Your second or third credit card is often
better than your first
If you already have a credit card, but you've realized it's
not the sweet deal you first thought it was when you applied, you'll be happy
to know that your second or third card is often a lot better than your first
assuming you've kept it in good standing.
This is because creditors have more trust in your profile
now, and are more willing to issue you credit. And if you're score is
good-to-excellent, they'll want to earn your business by extending the best
possible credit card offers to you. So now you're eligible to receive the cash
back, miles or points you've seen advertised by the biggest credit card
issuers.
That said, there's no need to ditch your old credit card in
favor of your new one. Keep your old card open, use it sparingly and pay it
back in full each month to continue building your credit history.
5.)
Emergencies
Last but not least, it's important to carry a credit card in
case of emergencies, financial and otherwise.
It's not a good idea to live off your credit cards, but it
is a good idea to carry one in case something comes up that you hadn't planned
for. Just make sure to keep your debt low, make on-time payments each and every
month, and be choose-y about what a real emergency actually is (and no, a
clearance sale isn't one of them).
The real world can be a scary place, but credit cards – when
used responsibly – don't have be so terrifying.
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