Credit cards are useful for solving short-term cash needs (1-2 months), and you don't want to leave them unpaid any longer than that. They work great for smaller expenses you are sure you can pay back without keeping a balance at the end of the month. Over time, this will gradually improve your score, too.
That said, credit cards won't work for lots of important situations and come with tons of downsides, especially for students:
- Credit cards aren't a replacement for cash, and can't be used for things like rent or dues.
- Students don't usually have enough regular income to pay off key expenses (like a security deposit for a summer apartment), and will end up with a balance.
- Most importantly, credit cards charge extremely high fees (15-30% APR!) that start the first month you carry a balance. They also have a ton of hidden fees and penalties.
- These high fees will compound each month the balance remains unpaid at that APR. When the dollar signs start getting bigger, so many people get trapped.
- Carrying a balance on a credit card (even an intro 0% APR one) through the schoolyear has a substantial negative impact on your credit score, which can make it harder for you to use other financial products after graduation.
- And finally, credit cards offer very low limits to students, which means students often have to get multiple credit cards to finance their needs.
By contrast, ThriveCash is an extremely unique financial product specially designed for students in school.
It doesn’t affect your credit history, it's useful for any duration, you can use it for cash, you know exactly what you're going to pay when you pick your plan, and you don’t have to make a single payment until you start working.