It’s Not Just About Borrowing Money: Credit Cards Have Other Benefits
A common belief about credit cards: “I don’t need a credit card because I don’t need to borrow money. I live within my means, so why use a credit card?”
Credit cards are a way to spend money you already have in a way that builds your credit score and returns other financial rewards.
Benefits a Good Credit Card Can Offer
- Cash back rewards (1% back on all purchases, 5% back on gas)
- Travel points – Great for med school interviews (free plane tickets, hotel discounts)
- Extended warranties on items you buy like laptops and cellphones
Other credit benefits that might not be useful for you yet:
- Rental car discounts (must be 25 years old or older)
- Travel insurance
When you use a credit card responsibly you get paid just to use the card. Here’s what I mean: Let’s say you spend $100 every month on gas and you get a credit card that offers 5% cash back on all gas purchases. By the end of the year, you’ve gotten an $85 rebate on your gas purchases just for using a credit card instead of cash or a debit card. You’re not buying anything you don’t need and you’re not spending any money you don’t have, and you’re getting money from credit card companies. It’s a smart move.
What About Annual Fees? Don’t They Cancel Out the Benefits?
Some credit cards charge a yearly fee to use the credit card called an “annual fee.” In some cases the annual fee might cancel out all the benefits you received during the year, but in other cases the benefits more than make up for the annual fee.
Most credit cards that are geared toward students and younger people have no annual fee or low annual fees, so the annual fee usually isn’t a problem. Do the math and use your best judgement, and always look for cards with low or no annual fee.
Build Your Credit History With a Card For Students
If you’re ready to begin responsibly building your credit history, there are many credit cards geared toward students that would be a great starting point for you. Cards for student offer travel bonuses (free flights to med school interviews!) and cash back rewards that make the cards really worthwhile as long as you don’t overspend.
Here’s a good place to get started: Credit cards for premeds.