BYU students like Michael Watkins may have difficulty deciding on when to apply for a credit card. (Photo Illustration by Ryan Hernandez)
Deciding when to get a credit card, and what card to choose, is a complicated decision for BYU students.
BYU bioinformatics student Michael Watkins does not have a credit card because he said he's concerned about them and their impact on his personal finance history.
'I just haven't really had the time to do the research into credit cards,' Watkins said. 'You hear negative things about them, and you hear that you should have one to build your credit. And I just haven't had the time to really dig into it.'
Having credit is important later in life when mortgage interest rates and rent come into play, according to finance professor Jim Brau.
Brau said he worries students graduate without credit and are ill prepared for the real world.
'I know some students who graduate — they never have a credit card in their name. They literally graduate with no FICO score — zero credit history,' Brau said. 'Well now they are strapped, because they can't get any type of credit, and sometimes it's hard to be able to get insurance or rent at a good fee if you don't have a FICO score.'
Watkins said he thinks his upbringing may have contributed to his initial fear of getting a credit card.
'I don't know if it's LDS culture that we are taught so heavily to stay out of debt, or if it's just the way I was raised, but in my mind credit cards were associated with debt,' Watkins said. 'That doesn't have to be the case. They don't have to be a symbol of debt if you use them wisely.'
Watkins said knowing more about credit cards would have helped him get one sooner, but he didn't know where to find trustworthy information.
BYU senior Phillip Henderson works for a company that specializes in how credit card rewards enable free travel around the world.
'The first thing I recommend to everyone is if you don't have a credit card, go and get one,' Henderson said. 'It's good to have a credit card for the sole purpose of building your credit. It's the quickest way to do it.'
Henderson said interest rates should not be something to be afraid of since they will always be higher when students first build credit, but the key is to always pay off the full balance for each month.
Brau said he agrees paying off the balance each month is important because then students aren't paying the minimum payment and building large amounts of interest debt.
'I would start with a small credit limit, like even $200, so students can test the waters to make sure they don't become a credit addict,' Brau said.
Brau suggests having a parent cosign a credit card, which is something he did with both his daughters who attend BYU.
'Some students will have to cosign with their parents in order to get it going, which is not a bad idea if you have a small enough card, in my opinion, because it starts a credit history,' Brau said.
He said he hopes students learn the advantages of credit cards and follow his advice.
'Those are my three things: interest rate, start with a small credit limit and cosign with your mom or dad,' Brau said.