Five Great Credit Card Tips For Students
For students going to college for the first time, you may be inundated with college student credit card offers. Building credit responsibly is an important thing to learn. Using a credit card in college wisely will help you later in life make larger purchases such as a home. Follow these important tips and educate yourself on how credit works and how to use it wisely.
HAVING A GOOD CREDIT SCORE
Having a credit card with a large balance and making minimum payments might seem like a good way to establish credit, but you will actually be reflected as a credit risk by your FICO score. If you max out your credit card and can’t pay it off you become a liability. Your interest rates on other purchases, such as a vehicle, may be affected by this.
Make it a goal to keep as much open credit on your card as possible. Use your card for purchases that you can pay off quickly. It is also better if you can keep a “zero” balance each month. This will not only affect your credit score for the better, but will also help you avoid paying interest.
- DEBIT CARDS: Debit cards will offer the same conveniences of a standard credit card. With these, the money is automatically deducted from your checking account. The only drawbacks to a debit card is the fact that is does not help with establishing your credit score. If your card is stolen, the thief will have immediate access to your funds. While there may be no liability, it can be a huge inconvenience while the report is investigated.
- INTEREST RATES: This is something that you must pay careful attention to. If you realize you are unable to pay your balance, or use your card for an emergency such as a car repair, you don’t want to discover too late that the interest eats up your payments. Some cards offer 0% for an introductory period, while others offer a low rate. Find the best college credit card with low interest and long term offer so you won’t have any surprises later.
- REWARD CARDS: If you know that you are responsible about paying your bills every month, perhaps you should consider a reward card. By using a reward card for monthly expenses and paying it off each month, you can increase your rewards for things such as flight miles - great if you have to go home to visit - or cash back offers. Find the reward that meets your needs best.
ASK YOUR CREDIT CARD COMPANY TO NEGOTIATE
Credit card companies are in competition with each other. Once you complete your student credit card application and get approved, contact your credit card company and ask them to lower the rate. If you have a good history or making payments on time, they are likely to negotiate. Communication will keep you in good terms with your company - they count on making money from you, so make them work to keep you as a customer.
Whichever card you go with, make sure to be responsible. Understand the risks associated with getting too much credit, keep your credit card spending under control, and use your card to your advantage.
Don’t rely on your credit card as a source of income. Use it responsibly. Being a student has a lot of expenses associated with it, so it’s best to keep your available balance open for emergencies. Try not to use it for a night on the town, since that money isn’t free. Learning good spending habits during college makes the learning process more complete. Financial responsibility may be the most important thing you learn during the college years.
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