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Credit cards are invaluable to building credit, but there are so many options.

It’s like going to a restaurant, getting overwhelmed by how many options there are, and then realizing that you’ve only made it through the beef plates and there’s 3 other proteins + vegetarian.

So I built something to make that easier. A student credit card tool to understand which cards may be best for you, and why.

None of these use affiliate links (unfortunately :) so I have no motivation to include one card over another.

All cards have no annual fees, and solid cash back opportunities.

You can try it out here.

5 multiple choice questions and you get your cards. This will be the easiest test this finals season. Good luck!

I’d be remiss if I didn’t make a small note on how to properly use a credit card.

One of the few pieces of financial advice I got growing up was “be careful with a credit card.”

And that was it. Which successfully struck fear into me but I still had no idea what I was supposed to be doing.

Pay your statement balance, in full, every month, ahead of the due date. And keep your utilization below 30% (ideally below 10%).

What each of those pieces means:

A credit card has 3 different types of balances: statement balance, current balance, minimum balance.

Statement balance is the total amount owed at the end of a billing cycle. Essentially what you owe for your spending last month.

Current balance is what you owe in total. You could have spent 100 bucks last month, but then another 25 in the first week of the new month. Statement balance = 100, current balance = 125.

And your minimum balance is the minimum you have to pay to avoid late fees. But this does not avoid paying interest on your credit card, which is expensive!

So if you pay your statement balance off in full, then you avoid having to pay any interest, face any late fees, and your credit score will glow because of it.

And your credit score makes it easier to get rent an apartment, buy a house, and get cheaper loans.

If you miss a payment, you probably won’t get a second chance. You’ll be marked as late, have to pay interest on whatever you didn’t pay off until you do, potentially face late fees, and your credit score will drop.

Your missed payment will stay on your credit report for up to 7 years.

So set up autopay. Set up a reminder. And make sure you pay off the card every month regularly.

Pretty self explanatory but make sure you’re paying off the card before your payment due date, not randomly.

You’re payment due date is when you are determined as late. So if you pay off your card late, the company doesn’t care if you had the money to pay it off. It’s late, and you’ll face penalties.

Your credit utilization is the percent of available credit you are using.

So if you have a credit card limit of $1000, then $300 would be 30% utilization.

If you have multiple cards, utilization is calculated on a total and per card basis, so you should be cognizant of both.

So if you have 2 cards, one with a $500 limit and another with a $1000 limit, and you spend $300 on the first card, then you will have 60% utilization on the $500 card, and a 20% utilization overall.

The 60% utilization could negatively impact your score! So focus on keeping your utilization low, and your score will glow.

And that rhymed so you know it’s true.

More here.

Thank you so much for being a part of this newsletter. I am grateful to write to you weekly and I hope this helps you feel more confident with your finances.

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