Credit Card Guidelines for College Students
Did you know that the average freshman carries more than $1,500 worth of credit card debt? That staggering figure was revealed by a survey conducted by Nellie May in 2005. By the time these students graduate, they’ll be leaving a considerably large amount of debt even before they get their first jobs.
Yes, it can be a very frightening situation. Yet it doesn’t have to be that way. Just by using their credit cards for students in college correctly, students can protect themselves from the threat of bad debt and build up a solid credit history for themselves. In this article, we have presented simple but valuable steps on managing a credit card, especially for young people and college students.
Find a reasonable credit card. A credit card with a reasonable interest rate that would last is a better option than a credit card with zero percent introductory rate that is bound to go up after only six months. Since it will be your first credit card, you need a reliable credit card. One that can help you establish and maintain a good credit history.
Be aware of the fees. Aside from a low interest rate, be sure to check out if the rest of the fees are reasonable as well. Check the annual fee, late penalty, over-the-limit fee, and other transaction charges that you may incur once you use your credit card.
Rewards or without rewards? If you plan to get a student credit card with rewards, see to it that you will be able to pay your monthly payments completely. Otherwise, you may get charged with a high rate of interest. Better yet, if you’re not sure whether the rules of the reward program fit your lifestyle, go with a non-reward credit card with a low interest rate.
Stick with one credit card. Many young people get at least two or more student credit cards, thinking that more accounts would boost their credit rating. But achieving a high credit score does not depend on the number of credit cards you own. On the contrary, a good credit score depends on how well you can manage each account. Thus, even if you own just one credit card, if you use it regularly and you are consistent in submitting your payments on time, you can surely build good credit and make a good impression to future creditors.
As a student, it is strongly recommended that you stick with one account to avoid the risks. First, having multiple credit cards may encourage more spending, since you can always charge it to one of your credit cards and pay at a later time. Second, managing different credit card accounts can prove to be difficult especially if you have incurred a balance on each card. Also, paying off your debts can become a burden and if you fail to pay on time, you will be charged with additional fees on interest rate and late penalty, charges. All these trouble can be avoided by focusing on just one card.
Be smart with your spending. Ultimately, avoiding the bad credit trap will depend on your own spending. Before charging purchases to your student credit card, see to it that you will be able to pay on time. Always remind yourself of the possible consequences. And if you’re not certain whether you can pay on time, then do not charge it on your credit card.
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