Photo by Netel Murray -- The average American household has $15,216 in credit card debt, according to Federal Reserve statistics. To avoid getting into debt, research before choosing a credit card, and use it sparingly.

Photo by Netel Murray — The average American household has $15,216 in credit card debt, according to Federal Reserve statistics. To avoid getting into debt, research before choosing a credit card, and use it sparingly.

With the lessons learned from the 2008 financial crisis looming over their heads, many people find the thought of debt and credit unnerving, and for good reason.
A major contributor to the Great Recession was the amount of overspending that easy loan applications and low interest rates encouraged. Consumers would purchase homes, then find them worth far less than they paid within a few years.
“It is too easy to misuse credit,” said Mary Ondricek, a junior studying horticulture.
However, responsibly using credit cards and small loans actually leads to benefits later on.
Ondricek does not have a credit card, nor has she ever had a student loan. She is debt-free and lives off of accrued savings.
Being debt-free is a great asset to a person’s credit score, but it is not the only important thing. Credit scores are based on a variety of variables, including credit history, outstanding loan balances and a person’s debt-to-income ratio.
Obviously, financial experts recommend maintaining an excellent credit score, but good credit is far more than being debt-free.
Even a debt-free consumer starts with a credit score of zero and builds it over time by being a responsible spender, using credit cards and paying them off regularly, and applying for affordable loans.
“If you don’t have credit, you’re not going to be able to go far in life,” said Bradyn Norris, a junior studying accounting. “The sooner you start responsibly using a credit card, the better.”
Norris got his first credit card in 2011, realizing that he needed to start building credit.
“I walked into my bank and asked a banker about good credit. He answered my questions about why it was a good idea to start building credit and advised me on how to use the credit responsibly,” Norris said.
He said he was told to use his credit for purchases he could afford and then pay the balance each month. He was also told how to avoid debt and interest charges.
“People think that credit cards are bad and will always lead to debt, but they don’t realize that if they pay everything off monthly, they’ll never have to pay interest,” Norris said.
High interest rates are typical for first-time credit users, but interest is only accrued if the customer doesn’t pay the balance each month.
“Credit cards are good if you are a conservative spender who can avoid impulse buying. They can be used to build good credit for when you are applying for a home loan,” said Kevin Kopsa, a sophomore studying computer science.
Despite his opinion of credit cards, Kopsa does not have one.
“I consider myself a conservative spender, but why should I go into debt paying for something when I can just save my money and buy it with cash?” Kopsa said.
Ondricek uses her money in a similar way, apportioning 10 percent of her income to tithing and budgeting the remaining 90 percent for her expenses. She has enough cash to pay for things, so she’s never had a credit card.
However, having a credit card can be beneficial if you use it responsibly because it can help build credit.
One reason for such an approach, according to most personal bankers, is that credit needs to be built before a person applies for a mortgage or other large loans.
Loan worthiness is based on a combination of revolving credit history and loan or installment credit history.
BYU-Idaho’s Financial Aid office can advise students on credit issues, according to their website.