Credit, debit or cash: what’s in your wallet?
By Abigail Moore
Establishing a credit score may seem impossible without first applying for a credit card.
Quincy University students say secondary educational systems have failed to teach high school students about the fundamentals of managing money, establishing a credit history, and even how to use a credit card. Financial speaker Dave Ramsey advocates for getting rid of credit cards, claiming them as an ‘unnecessary evil”, Quincy University Professor of Accounting Dr. Mitch Ellison, approves of the benefits of using credit cards if used appropriately.
College students are in a position of learning how to manage money and how to budget appropriately for large purchases after graduation. Ellison is passionate in the belief that credit cards are imperative in the process of making ‘big’ purchases doable after graduation.
“Credit cards are good if you use them to your advantage and not the banks advantage. You can use them to establish your credit history that you will need to buy a house and a car. One of the easiest ways to establish a credit history is to apply for a credit card,” Ellison said.
Ellison says the danger of credit cards is that not many people understand how to use them.
“The danger of credit cards is when you don’t physically set the money aside to pay that or you think that its free money. It’s not free money,” Ellison said.
Ray Heilman has been using credit cards in order to accumulate points for travelling purposes. Heilman points out the dangers of credit cards if not used correctly.
“There’s not a big difference between a person who spends without any concern whatsoever with a credit card and person who’s on a drug addiction. And you can’t stop because you have the card there, ” Heilman said.
When it comes to deciding what credit card to apply for and how to use one, Stacey Hert, Quincy University financial aid advisor, suggested some ideas for credit card ‘newbies’.
“Choose one that is reputable and do not spend more than what you have,” Hert said, “Paying it off every single month is very important.”
QU Junior, Genesis Torrens, does not own a credit card because of the financial advice of Dave Ramsey and also with the guidance of parents.
“Dave Ramsey’s mentality is you can only pay for things you can actually afford. Cash is something that is concrete, something up front you can actually exchange,” Torrens said.
As a college student, Torrens believes that it is unnecessary to own a credit card.
” I think it opens up a word of uncontrolled finances. It gives us the illusion that we have more money than we actually do in a false sense of freedom when it comes to the market,” Torrens said.
QU student Abbey Dickherber is also against applying for a credit card. She learned from her parents that there are other ways to build credit.
“In high school, they advise you that you shouldn’t get one, they don’t tell you why,” Dickherber said. “My parents advised me not to get one because you always worry about the payments or you’ll spend more than you have. I feel like a lot people use their credit cards because it’s free money in a sense, but then they are left with the debt to pay.”
Credit card companies make spending very convenient by allowing somebody to borrow money to buy what they want at that moment and pay back the balance later.
Although, Dave Ramsey advocates for the complete avoidance of credit cards, his advice for how to build a credit score focuses on paying off debt.
Ellison agrees that when it comes to establishing a credit score, the process is simpler than expected.
“You could go down and apply for some kind of loan,” Ellison said. “Almost all loans are predicated on a credit report and the credit report is predicated on some time period in which you borrowed some money and then paid it back. So it’s kind of like getting your first job without experience, it’s very hard to do. A credit card, if used correctly, is an inexpensive way to establish a credit history.”
A credit history determines a credit score, and also what loans a person will qualify for in the future. Establishing a credit score is also possible by paying back student loans.