Credit Cards Are Not Bad

Question: “Sir, thanks for your note on how to become financially independent in America. I want to ask you Sir, is opening a credit card bad as many in our village community have suggested?”

My Response: Having a credit card is NOT bad. What is bad is the illusion that a loan (yes, a credit from a credit card) is not a responsibility. So, instead of focusing on the credit card, focus on what the money you are getting via credit would be used for. In America, credit is part of the system, and you must NOT be fearful of running a life built on credit. But remember: after running, you count the miles, they say. If they give you a loan, that money must be repaid. That it came as a plastic card does not mean it is not US dollars!

Let me share an experience which could help you. Many years ago when I made it into America, I sought insights on how to quickly get into the American financial system, understanding that there was no village to relocate to, if one cannot pay the bills (in Nigeria, if you become homeless in the city, you can move to your village!).  I went to the foreign students office; they referred me to a woman, Maureen, in the account services. Maureen gave me a small book on building credits, and told me three things:

• You must build credit in America.
• To do that, since you just arrived from Nigeria, call your bank or a credit card company, and ask for a prepaid credit card.
• Where possible, buy everything with that card, and at the end of the month, pay things off. Do not carry a balance!

I did not have enough but I did send Chase $200, and they sent me a prepaid credit card. I did as she instructed; I picked an extra student job in the farm (Instrumentation Engineer, managing sensors and electronics in the university farm which covered hectares of land. Was an IT guy in a bank in Lagos). Within 3 months, Chase returned the deposit, and increased the card to $500. Then $1000, $5000, $20000, etc. 

Over the years, I have had a near-perfect credit score: hovering around 820-845 out of possible 850. And that has saved me tons of money because every bank considers me a low-risk borrower. With a good credit, where others are charged 21%, you can get the same credit at 6%.

Finally, those telling you NOT to touch credit cards are not helping you because you must build credit if you want to unlock possibilities in America. What you should not touch is spending money with a plastic on an illusion that it is not USD.

How Can I become financially successful in America?

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