You really shouldn't be making big purchases on your credit card

Posted at 4:30 AM, Sep 29, 2017
and last updated 2017-09-29 07:37:47-04

CINCINNATI -- Living without credit in 2017 is nearly impossible. Landlords, real estate companies, banks and even insurers all use credit scores as three-digit barometers for a person's reliability and financial solvency, meaning it's critical to begin building as early as possible in order to prepare for big-ticket purchases in the future.

But living with credit can also be a struggle. According to a Nerdwallet study, the average household with credit card debt pays nearly $1,300 in interest each year.

"The biggest (credit card) advice I would give is, really think about whether you can afford something," Xavier University professor and D'Artagnan Capital Fund manager David Hyland said. "If you can't pay it off at the end of the month, you probably can't afford it."

Hyland teaches his Xavier students not to stretch their credit card balances simply for the sake of stretching them -- the fact that a person technically can spend $1,000 without immediately having to pay for it doesn't mean they should. 

Making credit card purchases can feel like spending Monopoly money, but they aren't the same, and over-reliance on credit cards creates long-term financial problems.

"Try to use them for transactions," Hyland said. "Try not to run a balance, try not to finance things with the credit card."

Senior Matt Nola, a finance and marketing major, said he had taken Hyland's lessons to heart when making his own spending decisions.

"I don't only pay the minimum statement," Nola said. "I pay everything at once because I find that the easiest if I have all the money on my bank account. … If you can pay it on time, just do it because then you're not losing money for just waiting."