How to adult: credit cards 101


graphic by Patrick Ervine using Piktochart

Patrick Ervine, Staff Writer

If you’re getting close to 18 years old, you may notice how your mailbox is starting to boil over with credit card offers from various banks. Although these may seem like good offers, they might not be as appetizing as you think.

So, what is a credit card and how does it compare to a debit card? First of all, the major difference between a credit and debit card is that on a credit card, you often pay at the end of the month. However, a debit card will immediately transact from your bank account.

“I like debit cards because you can only use the money that you have, but I do like credit cards because there’s a little bit more security in that if someone uses your card,” volleyball coach Kelsey Hutchinson said. “A lot of times the card companies will reimburse you for the money that you lost.”

Credit cards often have interest rates, which raise the expenses of purchases you don’t pay off in time, and are usually compound, which means they increase exponentially. Generally, many of the card offers you will receive will have high interest rates. This can cause your bills to grow very fast, possibly trapping you in debt if you can’t pay your bill in full. However, without a credit card, you might have even harsher interest on loans.

“[Back] when my husband and I tried to finance his new car, it was a 28% interest rate,” Hutchinson said. “It was so high because he never had a credit card and didn’t have a credit score, because his parents didn’t allow him to get a credit card in high school.”

Keep in mind, a credit card will usually not have an infinite amount of money to spend. Credit cards have a spending limit per month that prevents you from taking out too much money from the bank. The lower your credit score, the lower this limit. Many modern credit cards can also be run through transactions as a debit card, allowing you to spend money from your checking account directly when you need to.

When going over credit card offers, there are a couple of red flags you can look for. Excessive or unnecessary benefits a card may offer will usually indicate a high interest rate. If a bank doesn’t immediately show who they are in an obvious way, you might want to look for another offer. Interest rates above something as low as a measly 4 to 6 percent can be quite high, so don’t be fooled by small numbers, because they might not mean the same as they look.

If you’re looking at a specific bank, check their reputation and whether their benefits and services are relevant to your needs, as well as if they have banks in your area. These factors can determine how useful a bank is for you, and whether you should trust them or not.

“We researched the credit cards I have and made sure that they were credit cards that were good for me,” Hutchinson said.

Gas pumps and ATMs can have skimmers installed into them by unscrupulous criminals. Usually a skimmer can be spotted by checking if the card receptacle is bulky or shaped strangely. If you suspect a there is a skimmer, give a sharp tug on the card slot, and the skimmer will probably come off. If you discover a skimmer, immediately report it to someone working at the building. Many ATMs and gas pumps will have tape on the hatches that open the internals of the machine. If these pieces of tape say void on them, it indicates that the machine has been internally tampered with and should not be used because a skimmer is likely on the inside.

“I have had my card number used from a skimmer,” Hutchinson said. “We use an app called Mint, which allows us to track our transactions every day, so once we saw the suspicious transaction, we contacted our credit card company and informed them. They said we had to dispute the transaction, and they sent us a brand new credit card.”

If you see a suspicious purchase on your card statement, and you are absolutely sure you did not perform the purchase, or your card has been stolen, report it to your bank, and tell them to freeze the card. When in doubt, ask questions to your economics teacher or a banker you can trust.