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  • Writer's pictureSharon Chen

Credit Card History & Recommendation | 为什么要使用信用卡

How did the concept of a credit card come about? Why should I start one? Which one should I use? In this article, you will get all of your concerns on credit cards answered! Keep reading ahead


History:

The idea of “credit cards” was invented in 1946 when merchants deposited sales slips (receipts) into the banks and the bank would charge the customers. Nowadays, credit cards can lead to travel rewards, cash back on purchases, insurance and even give you lower interests on loans. These are not meant to be advice, just my own personal opinions.


Imagine buying stuff and getting rewarded for it!!! That is exactly how some credit cards work. Some credit cards will allow you to get “mileage” per dollar spent so that once you accrue enough miles, you can exchange them for tickets from specific airlines. Also, cards like “Discover it Cash Back” will give you “5% cash back on the first $1,500 spent in different categories you activate each quarter (like gas, dining, and Amazon.com). 1% back on all other purchases. After the first year, Discover will match all of the cash back you’ve earned to date.” You will earn money back when you spend on items you were going to buy anyways.


To add, cards like Chase Sapphire Preferred will give you automatic car insurance when you rent a car using that card. I remember travelling to the Balkans and the car we rented ended up having scratches all over because of the uneven roads. Luckily, we had that card and after a phone call to Chase, everything was taken care of. What might have been a $500 bill ended up costing us nothing.


A lot of businesses tend to do cash only because of the fee that credit card companies charge and *cough* to avoid taxes *cough*. However, these business owners do not realize that the pros of using or accepting credit cards far outweighs cost. For instance, when these business owners have to buy anything that requires a loan (house, car, renovation, etc.), two things will happen. First, the seller will look at the reported income and see that they do not make nearly enough to qualify which might result in a higher interest. Secondly, they might not even get the loan because of how low their reported income is.


A legal loophole that people do not know about is to register your business as an LLC. Thus you are able to write off purchases that’s relevant to your business as an expense, which will allow you to be taxed at a lower rate. For example, if you were to buy a new car and you have a restaurant, part of that car can be written off as a business expense because you will be using it to commute. This is a very general idea of the idea of an LLC so please consult your accountant before making any financial decisions.


A credit card also allows you to build a good credit which then can lead to several benefits. For instance, those with a good credit card score will have a significantly lower interest rate compared to those who do not. In addition, they will have a higher likelihood of being approved for loans compared to their counterparts.


Here are a list of recommendations for beginners with little to no credit:

Discover it® Secured Credit Card

  • You earn 2% cash-back on up to $1,000 in combined spending per quarter at restaurants and gas stations, and 1% on all other spending. INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match. The annual fee is $0. And after eight months, Discover automatically begins evaluating your account to see if you qualify for getting your security deposit refunded.

  • Cons

    • The $200 minimum deposit might be hard to pull together — especially since you need to have the funds ready upfront when you apply.


Secured Mastercard® from Capital One

  • The card's deposit requirements — and the possibility of qualifying for a higher credit line — makes this card a valuable choice. The annual fee is $0. No credit history is required, as is generally the case with secured cards.

  • Cons

    • You won’t qualify for this card if your monthly income doesn't exceed your rent or mortgage payment by at least $425.


For Students

  • Discover it® Student chrome

    • This card features simple rewards: You earn 2% cash back at restaurants and gas stations, on up to $1,000 in combined purchases per quarter. All other purchases earn 1%. The annual fee is $0. It comes with a potentially generous sign-up offer: INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! So you could turn $50 cash back into $100. Or turn $100 into $200. There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match. If you maintain a GPA of 3.0 or higher, you also get a $20 statement credit every year for up to five years.

    • Cons

      • Discover isn’t the most ideal payment method abroad, so this card isn't the best one to take on a study abroad trip. The network isn’t as widely accepted internationally by merchants as Visa or Mastercards.

  • Chase Freedom Student Credit Card

    • Simple cash-back program makes earning and redeeming rewards easy while building credit. Lets you earn a credit limit increase by making five on-time monthly payments within 10 months of opening account

    • Cons

      • The card cannot be applied for online. You must visit a Chase branch



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