Student Loan Hero CEO and co-founder Andy Josuweit has avoided credit cards for years — his past experiences had given him a healthy aversion to debt. That changed recently, however, when Andy signed up for a Chase rewards card.
But he’s not entering the credit card world recklessly; he has a plan to use his card wisely and avoid debt.
Below, find out what made him decide to apply for a new credit card and what his strategy is going forward.
Andy’s past credit card experiences
After graduating from college, Andy interned in Africa. When he got back to the States, he was broke.
Despite working as a waiter and putting in 14 hour days, he still struggled to make ends meet. To give himself a cushion, he signed up for a card. His credit limit was just $400, but at the time, he was so broke he couldn’t keep up with his payments.
“It took me two years to pay off the balance,” says Andy. “It just left a bad taste in my mouth. It was a very negative experience.”
And with $107,000 in student loans, Andy was overwhelmed with debt. As he dealt with unhelpful lenders and debt collectors, his credit was destroyed.
“Student loans ruined my credit,” says Andy. “Between my bad experience with my first credit card and my debt, my credit score was about 450.”
Paying off his debt and rebuilding his credit
Andy worked hard to pay off his debts. After launching his own company, he accelerated his payments to get his loans paid off as soon as possible.
“I finished paying off my loans in August of last year, and it was a huge moment for me,” says Andy. “That $107,000 experience made me very debt averse, and I have been focused on getting back to zero and having no debt.”
Andy did get a secured credit card to help build his credit. With a secured card, you deposit money into the account, and that money is your credit limit.
“You’re basically borrowing from yourself,” says Andy. “And it boosted my credit score by about 100 points.”
Over the past few months, Andy built his emergency fund and added to his savings. But he realized that the money he was saving was just sitting there and not earning any points or rewards. With a goal of buying a home in the future, he started to consider getting a regular credit card to help improve his credit score even more.
Deciding on a new credit card
With improved credit and a steady income, credit card companies inundated Andy with card offers.
“I was getting a lot of offers, but none of them excited me,” says Andy. “But then I saw the Chase Sapphire card. The company was offering a special promotion where you could get 100,000 points, with perks like airport lounge access. Since I travel a lot, it sounded like a good fit for me.”
When he visited a Chase bank branch, the teller explained the promotion was coming to an end and highlighted what rewards he could earn.
“There was a sense of urgency, but I was already shopping around and knew this card was a good deal,” says Andy.
He decided to apply for a Chase credit card, and was approved within minutes for a large credit line. Having access to that credit line should help Andy’s score.
“I’m excited to see what it will do to my credit score,” says Andy. “A better score can help me get a better mortgage interest rate, which could save me thousands.”
Managing his card
Just because he has a great new credit card doesn’t mean Andy’s going to start racking up a balance.
“I’m still very debt averse,” says Andy. “I’ll pay off my balance in full each month and use it solely for rewards. Chase makes auto-payments very easy, so that helps me manage my balance.”
But while Andy is happy with his decision, he does urge caution for anyone considering a new credit card.
“Make sure you are ready for a card. Sometimes, you’re just not,” says Andy. “People like the idea of rewards and points, but make sure you have the discipline not to rack up debt, and pay it off each month. Get a card for convenience and to build your credit, but do not spend money you don’t have.”
Applying for a new credit card
Before getting a new credit card like Andy, do your homework to find the best card for you. Choose a card with rewards that fit your lifestyle and come up with a strategy to pay off your debt in full to avoid building a balance or paying interest charges.
If you’re interested in building your credit and getting your first card, check out these credit card offers.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||Rates (APR)||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|7.39% - 29.99%||$1,000 - $50,000||Visit Upstart|
|5.29% - 14.24%1||$5,000 - $100,000||Visit SoFi|
|8.00% - 25.00%||$5,000 - $35,000||Visit Payoff|
|5.99% - 16.24%2||$5,000 - $50,000||Visit Citizens|
|5.99% - 35.89%||$1,000 - $40,000||Visit LendingClub|
|5.25% - 14.24%||$2,000 - $50,000||Visit Earnest|
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