When international students come to the United States to attend university, finances are always a major concern—it’s the single biggest barrier to the privileges of studying abroad. If you’re fortunate enough to have a scholarship and ample money from home to help with finances while you study, you may not feel the need to seek out other sources of income. But whether you need the extra money or not, it’s highly recommended that you find a way to get a proper US credit card.
This is different from a bank or debit card that may have the logo of a credit card company on the front. These cards only offer access to money you already have in your bank account. They do not build your credit. In the US economy, good credit is as important to your economic success as steady income and savings, the first of several reasons why you’ll want to start using credit whether you need it or not:
1. Your Credit Score
You create good credit by borrowing money and paying it back promptly. Some US citizens borrow money in the form of loans for large purchases, in addition to using credit cards. By demonstrating that you can pay back money that you borrow, in small or large amounts, you’re establishing good credit which is reflected by your credit score. Your credit score says a lot about you. It’s a grade for your financial performance, just like the ones you get at school. That grade matters to banks who are determining your interest rate, landlords who are deciding whether or not you will be responsible with your rent, and insurance companies who are setting your monthly payments. Here’s how they read your credit score as a grade:
580 or lower: F
720 or higher: A
Ideally, you want a score of 680 or higher. The good news is that the burden on you is simply paying back your credit balance on time. Only missing or avoiding payments adversely affects your credit score. Once you’ve started using your credit card for 6 months check with your bank to find out the status of your US credit.
Pay for dinner, books, and toothbrushes right now, without waiting for cash. If you receive money via wire or mail, use this to pay off your credit balance as soon as possible. In the meantime, you don’t have to worry about timing or delays in money you may be getting from home or even a job. By building credit you are also building financial independence in the US. With a good credit score built through a history of positive credit card use, you can sign a lease, rent a car, or sign up for a cell phone.
Recurring payments such as subscriptions or other monthly bills are most easily made with a credit card. While you can use a debit card for these payments, it’s best to avoid overdrafts and other complications by using a proper credit card and paying off the balance all at once with your monthly credit card payment. Some services such as cellphone companies insist you keep a proper credit card on file.
Paying with a credit card, either in person or online, is actually safer than paying with a debit card. When your debit card is compromised, whether through fraud or unstable payment infrastructure, that card is tied to your cash assets. Your resources are extremely vulnerable when that information enters the wrong hands. It’s much easier to disconnect from a credit card when that number is compromised. A credit card is also safer than cash, especially when you’re out alone at night. If you’re planning to be out making multiple purchases, it’s best to take a credit card and a debit card only. You can use the former at most places and the latter if you need to make cash withdrawals for businesses that do not accept credit.