WHAT IF I told you that you could have a 29-day, interest-free loan on every purchase you make? You probably would not care, but if I told you that you could save $5 per month, you might finish reading the rest of this column.
At the risk of sounding like a Bank of America customer retention manager, allow me to preface my response to an editorial by The Cavalier Daily managing board ("Branching out," Oct. 5) by saying that I do not own stock in Bank of America, nor do I plan on assuming a position in the company any time soon. In case you missed the editorial, the managing board suggested that University students consider other options for facilitating financial transactions that exist for them around Grounds.
One main focus of the article was on the use of Cavalier Advantage or Student Accounts in lieu of a debit card, to avoid Bank of America's new $5 monthly service fee on debit card purchases. In addition, the piece pointed out that the University of Virginia Community Credit Union, a local bank, does not yet charge the same fee for debit card transactions.
Because of the cost structure of banks, it can only be a matter of time before new regulations that affect debit card transaction fees force other banks into charging debit card fees. In fact, Chase bank and Wells Fargo already have started charging fees on debit card transactions to some customers.
I certainly agree that it is wise to question whether or not using a debit card is the best option for making purchases, but this is not my point. I would strongly recommend replacing your debit card with a credit card, and, conveniently enough, Bank of America would be more than happy to help you avoid their monthly fee by doing so.
Some myths exist about credit cards that often scare away responsible college students who might consider owning them. First, some believe that it costs money to own a credit card. Yet almost every national bank offers a card with no annual fees.
Second, it is inaccurate to say that opening a credit card account in itself will destroy your credit score for purchases later on in life. Whereas it may be difficult to find a bank to give you a credit line if you have little to no credit score, opening a credit card account can in fact be a good way to build up a credit score if you are able to avoid the temptation to spend irresponsibly.
There is at least one surefire way to protect against the impulse purchases that credit cards can enable. First, you will need to place your card in a glass of water and then insert said glass into a freezer. When the impulse to buy something arises, you will need to wait nearly an hour to think about your purchase, as microwaving the card will render it unusable.
Signing up for many cards, paying your bill late and accumulating a balance will indeed mark you as a credit-hungry, irresponsible borrower. As such, my addendum to the managing board's piece is not a suggestion to start signing up for every card offer you receive by mail, but rather to take the opportunity to plan on using a credit card exactly as you would use your debit card.
If you have the diligence to pay your bill on time and buy only what you can afford, there are actually numerous benefits to using a credit card in lieu of a debit card. Aside from the highly-marketed "miles" and "points" you can accrue, there are many more advantages for you, the giddy consumer.
If your parents are like mine and did not think ahead to co-sign you onto one of their credit cards and lock it in a safe to build your credit score, then you probably have no credit history. Coming out of college, this can be quite a hassle. Having no established credit will make it both more expensive and more difficult to acquire financing for your first vehicle or to rent an apartment as you begin your career. Allow me to spell it out: Maintaining a credit card account in good standing throughout your college years will make these upcoming tasks much easier.
Another benefit of possessing a credit card that is frequently overlooked is the increased consumer protection you get from not carrying around the entire contents of your checking account in your back pocket. Because you do not actually have to draw money out of your account to pay the bill until your statement due date, you can dispute a transaction if someone gains unauthorized access to your card.
Unlike Cavalier Advantage, some credit cards actually double the manufacturers warranty on everything you buy. Think about what you could do with the $79 you saved on AppleCare for your iPhone if you had known this before you paid cash at the Apple Store.
I am certainly not suggesting you run to go open up a credit card account if you think you cannot handle the responsibility of "buy now, pay later," as this can lead to major problems down the road. Yet if you pay your bill in full on time and buy only what you would if you were using your debit card, I see the advantages to using a credit card outweighing the "safety" of a debit card.
Andrew Kouri is a Viewpoint writer for The Cavalier Daily.
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