Should a New Graduate Choose Credit Card or Debit Card?

Graduating is one of life’s big steps which take lots of hard work and dedication. These fine habits can be valuable if applied to personal finances too. Some rely a lot on debit cards, but credit cards can also play a huge role in your future if used responsibly.

Once you complete an academic degree, your finances also graduate. You may straight away find yourself managing new expenses when you start paying down student loans. You will likely look at saving and budgeting differently, perhaps with some big commitments in mind, such as purchasing an apartment or a car.

To realize that future, you will have to earn a fine credit score and start building a credit history. A way to build it is using a credit card. If you make small credit card purchases and pay those expenses on time, then it may help increase your credit score. Being well within credit limits and having a small number of cards may help you boost your credit score.

However, how can you be eligible for a credit card when you just passed out of school or are still in college? The answer to this question may be more easy than you think. Find more info on which cards you may want to consider below.

A Student Credit Card

Student cards come with a lower credit limit and are being designed for those who may be yet to have regular income and are learning about credit. Some cards come with rewards, like cashback for grocery or gas purchases. In spite of lower credit limits, these cards can be used even after your graduation. Your spending activity will be reported to credit agencies, plus from day one onwards, you will start to build your credit history.

A Secured Card

It is possible to secure your credit card by making a lump sum deposit of say $500 in your bank account. This lump sum of money generally becomes the credit limit on your credit card. This works particularly well for those who are yet to have regular income or are repairing a problematic personal credit history. Secured credit cards work just like traditional cards in that the payment activity of the cardholder is being reported to credit agencies and they start or continue building their credit history.

A Traditional Card

Even if your career is just starting, you find yourself qualifying for a card. That is because credit card issuers usually look at age, income, credit score, and debt picture when assessing an application. You may also find yourself qualifying for one with a low maximum limit initially, but over time, when your income grows, you will be able to make that limit bigger.

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