I’m confused… What even is credit?

You land in the U.S. and everyone around you has a credit card. Your friends tell you how important credit is as you nod in agreement, afraid to admit that you have no idea what it is.

Don’t worry, you’re not alone! The credit system is already confusing enough for an American citizen, let alone international students like us.

Well, we at ChrysCard are here to help you navigate the credit system.

Credit is the ability to borrow money with the promise that you’ll repay later.

You need to apply for credit, and the lending institution you work with decides the amount of credit you can use based on your financial history.

So… how is that different from debit?

Well, both are little plastic cards that you shove in your wallet and can use instead of cash. But that’s it in terms of similarities.

Using debit is like using cash. It relies on your own money. Whenever you use your debit card, money gets transferred immediately from your bank account to the seller. This is especially convenient for purchases that you’d usually pay for in cash.

Meanwhile, credit uses the bank’s money. Credit lets you buy now and pay later. At the end of each month, you pay the total or minimum amount required on your account to avoid late fees. Credit cards usually come with handsome perks (think: cash back and rewards to satisfy your shopping/movie/travel addiction)!

Credit allows you to build a credit score.

This is a measure of trust that banks, insurance companies, landlords, and other institutions depend on. This means that a good credit score is a must-have if you want to borrow money to buy that Tesla you’ve been dreaming about.

Debit and credit cards are both useful and most people actually have both. Find a system that works for you while building your credit score!

Now you can officially stop pretending to know your stuff whenever your friends talk about credit.


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