Career & Early Adulthood |
You see it all the time on movies and TV! People go shopping and pull out their nice sparkly credit card to pay for the charge, but what exactly is it? Credit cards are actually a staple in adult finances. Read below for more on what credit cards are and why they matter!
Q: What is a credit card?
During a transaction, a credit card will work the same as a debit card. Both cards have a 16-digit number, a security code, and an expiration date; however, the mechanics behind them are different.
While debit cards withdraw your own funds from the bank, credit cards draw from a loan. This “loan” is called your credit line. Banks will approve you for a certain loan amount and this loan is the maximum the bank is giving you to spend. If your credit line is $500, then you can only use $500. If your credit line is $1000, then you can only use $1000.
Because the money is not yours, you have to pay the money back month-to-month. Most banks have a listed minimum payment amount. For example, you may have used $300 of your $1000 credit line, and you’re required to make at least a $35 payment each month. The minimum payments vary from bank to bank.
Notably, credit cards charge you an interest rate. Because the bank is allowing you to use their money, they will charge you interest to make more money back. If your interest rate is 10%, then if you use $100, you have to pay the bank back $110 ($100 + $10 for interest).
There are different types of credit cards. Some are specifically meant for college students! As you grow older, you will have options to cards that are specific to travel, rewards shopping, and more.
Q: Why should I get a credit card?
Importantly, credit cards can help build and increase your credit score! A credit card is a perfect way to show lenders that you are a reliable consumer through on-time payments and credit usage.
If you pay your credit card bill every month on time, your credit score will go up! If you pay more than the minimum payment each month, your credit score will also go up!
Additionally, using only a portion of your credit limit is extremely beneficial! Financial experts recommend using only 30% of your credit limit. This indicates to other lenders that although you have access to more money, you do not need to use it all. So if you have a $1000 credit limit, it is recommended that you only use a constant $300. If you use more than 30%, your credit score may decrease, but if you manage to keep it at 30% or lower, your credit score will go up!
Q: Who can get a credit card?
There are a few requirements for a credit card. You must:
- Be at least 18 years old. At this age, you must have a reliable source of income (your financial aid counts);
- Have a social security number. If you are a DACA recipient, you can use the SSN assigned to you to apply;
Applications will then ask for other basic information such as your residence, birthdate, and more. Note that some banks may require that you have a co-signer. A co-signer is someone who becomes responsible for your debt if you cannot pay it back. If you miss your credit card payments, then the co-signer begins to be charged and becomes liable for the debt.
After submitting an application, you will know if you got approved or not within a few business days. Some cards let you know if you got approved instantly!
Q: How do I get a credit card?
The first step is choosing a credit card to apply to. Because we are not financial experts, we cannot recommend specific cards; however, there is plenty of information available online. Some cards are specifically designed for college students. While your credit limit may be lower, it will have more advantages for college students such as easy approval or no yearly charges.
Google, “best credit cards for college students,” and choose according to what you think is best! Remember that this is a huge financial decision and can impact you negatively if you get rejected. First, make sure that you can prove you have access to financial aid. A work-study or part-time job will always be a plus! If you have not worked for a few months anywhere, you should wait until you have a longer history of income. Credit cards are a safer option for people who have been working for at least a year or two.
Follow the links below for more resources on credit cards! Please remember that we at the Let’s Go team are not financial experts. More individualized advice is required by experts.
Paying For College, Submitting FAFSA |
Paying for college can be challenging, but as a Californian student, you have several state-based financial aid programs available to help ease the burden. Remember that you will either need to submit the FAFSA or the California Dream Act application by March 2 in order to be considered for most types of financial aid. See our post, “Financial Aid 101”, to learn more about the process of applying for financial aid. Read on to find out more information about the Cal Grant, Middle Class Scholarship, Chafee Grant, and other financial aid opportunities in California.
Cal Grant
Perhaps the most well-known financial aid program in California is the Cal Grant. The Cal Grant is a state-sponsored grant program available to eligible California students who attend participating colleges, universities, and technical schools in California. Some key facts about the Cal Grant program are:
- The Cal Grant is gift aid and you do not need to pay it back
- You need to meet certain financial, academic, and general requirements in order to be eligible for one of the Cal Grant awards
- There are several types of Cal Grant awards, based on factors like when you are applying for financial aid, what type of college or institution you attend, and your income level. The following provides brief descriptions of the types of Cal Grant awards:
- Cal Grant A or B High School Entitlement: For eligible current high school seniors and recent high school graduates
- Cal Grant A or B Transfer Entitlement: For eligible students who plan to transfer directly from a California Community College to a participating four-year college or university
- Competitive Cal Grant A or B: For eligible students who are not applying as a high school senior, within one year of high school graduation, or upon transfer from a California Community College to a four-year college or university
- Cal Grant C: For eligible students who are pursuing an occupational or technical program
- You do not need to figure out which Cal Grant you may qualify for on your own – you are automatically considered for the correct award based on the information you provide when applying.
- The award amounts for the Cal Grant program depend on which award you have received and the type of institution you attend
Your FAFSA or California Dream Act application serves as your application for the Cal Grant program. Once you have submitted the appropriate financial aid application, you will need to create a WebGrants 4 Students account to access the next steps and secure your Cal Grant, if awarded. For more information about Webgrants, see our post, “After the FAFSA/Dream Act: Next Steps”.
Keep in mind that students who are current or former foster youth, and students who have dependents, may be eligible for additional funds or increased Cal Grant eligibility.
Important Links and Resources:
- Read detailed information about the different types of Cal Grant awards and their eligibility requirements here
- Check out the various Cal Grant award amounts by institution type and award type here
- Check out the 2022-2023 Cal Grant Program Income Ceiling chart here
- Create your Webgrants 4 Students account here
- Learn more about the Cal Grant B Foster Youth Award here
- Learn more about Cal Grant awards for students with dependents here
Middle Class Scholarship
If you are not eligible for the Cal Grant program but still meet certain financial and general requirements, you may be eligible for something called the Middle Class Scholarship (MCS). Unlike the Cal Grant, the Middle Class Scholarship is only available to eligible students at public, four-year universities in California. Some key facts about the MCS are:
- In order to be eligible, your family may have an annual income of up to $184,000 and hold up to $184,000 in assets
- The Middle Class Scholarship is gift aid and does not need to be repaid
- Award amounts for the MCS are sliding scale and may vary by student and institution. This means that you may receive a MCS at one college you have been accepted to but not another
- Students who are eligible can receive an award amount between 10% and 40% of the mandatory system-wide tuition and fees at a University of California or California State University campus
- At a CSU, awards can range between $574 – $2,298
- At a UC, awards can range between $1,257 – $5,028
Like the Cal Grant, your FAFSA or California Dream Act Application serves as your application for the Middle Class Scholarship. Once you have submitted the appropriate financial aid application, you will need to create a WebGrants 4 Students account to manage your award. You will be notified if you have been awarded a Middle Class Scholarship by August.
Important Links and Resources:
- Read the top 10 things to know about the Middle Class Scholarship here
Chafee Grant
In addition to the Cal Grant or Middle Class Scholarship, current or former foster youth who meet certain criteria may also be eligible for another financial aid program in California called the Chafee Grant. If you have been in foster care for at least one day between the ages of 16 and 18, as a dependent or ward of the court, you qualify for this award. If eligible, you can receive up to $5,000 per year (that does not need to be repaid) for five years as long as you attend a qualifying institution in or outside of California.
You will first need to submit a FAFSA or California Dream Act application to be considered for the Chafee grant. If a first-time applicant, you will also need to complete an additional form called the California Chafee Grant application, which you can access through their Webgrants 4 Students account. If the California Department of Social Services is unable to verify your foster status, you will need to complete an additional form to certify your eligibility.
Important Links and Resources:
- Find detailed information about eligibility, the application process, and more for the Chafee Grant here
- To learn about your rights as a California foster youth as well as resources available to you, visit the California Office of the Foster Care Ombudsperson here
California College Promise Grant
For California residents who attend a California Community College and meet certain financial and general eligibility requirements, there is another financial aid program available called the California College Promise Grant (CCPG). This grant waives all enrollment fees for eligible students and does not need to be repaid. It is important to keep in mind that the CCPG waives the $46/unit enrollment fee for any number of units you enroll in, but does not cover additional student fees or books and supplies – you will need to cover these costs through the use of other financial aid or out of pocket.
There are several ways to qualify for the California College Promise Grant, for instance by meeting the income requirements, providing proof of receiving certain federal or state benefits or showing a certain level of financial need. The easiest way for you to determine your eligibility is by completing the FAFSA or the California Dream Act Application, and submitting the California College Promise Grant Application for the specific community college you attend. The financial aid office will follow up to confirm eligibility and potentially request additional documents as proof.
Important Links and Resources:
- For a complete list of links to the California Community Colleges that offer online CCPG applications via CCCApply, click here
- To learn more about the financial aid and opportunities available at the California Community Colleges, check out the website icanaffordcollege.com
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