8 Tips For Students with Credit Cards

Written by on June 14, 2012 in Money - No comments | Print this page


College is a great time.  A great time for learning.  A great time for introspection.  A great time for meeting new people.  A great time for partying.  College is a great time for a lot of things.  One of them is a great time to build credit.  Students are on their own for the first time and credit is easy to come by.

For many credit is too easy to come by.  Student mailboxes are crammed full of first time loan offers.  This can be a good thing, as credit cards have many advantages, but for many it is like walking into a trap that takes years to get out of.

Missuse of Credit Cards wears students out.

Credit Card Driven Debt Overwhelms Many Students

There are many things about credit cards and credit in general that many students might not understand.  This article exists to help them get started with that first card.<!–Ads5–>

Most students have little or no credit history, but that doesn’t stop credit card issuers from aggressively pursuing them.  That is because college students are:
1. Responsible enough to be pursing an education and more likely than others to have high earnings in the future.  Hook’em young.
2. Naive about credit cards and act as a major source of revenue for the companies.
Student loan provider Nellie Mae has found that college freshmen carry an average balance of $1,585 and the balance swells to $2,864 by their senior year.

Many students get caught in a debit trap, because they spend the cards as if they were extra cash.  After the low interest initial offer ends that wild use of credit cards becomes extremely expensive.  With many entry level cards having a yearly maintenance fees and high interest rates it is very easy for young adult to get caught in a credit trap before they even get started with their live.With that end might if a student follows these tips they should be safe with a credit card finder.

  1. Don’t accept the first prepayed offer that comes in the mail.  Search for a credit card with no yearly maintenance fee and a low APR.  Make sure to choose the best card, not just the first one to send junk mail.
  2. When researching understand the terms of the card.  Is there a grace period?  What happens if a payment is late?  Can the credit company change the terms unilaterally?  All questions that you should ask, before signing anything.
  3. Focus on the go-to rate.  Not the low interest teaser rate.  That low rate will disappear.  Don’t get into buying habits that are dangerous.  Don’t try to play the card by purchasing while the APR is low.  Habits are everything.
  4. Learn about interest rates.  Find an interest rate calculator online.  See what happens when $700 dollars on a credit card takes months to pay back.
  5. Set a budget.  Never charge more than the ability to pay.  Make sure the cash is available before using the card.
  6. Always pay on time.  Late payments are finance companies trap.  Along with late fees many companies use late payments as an excuse to raise interest rates.  Sometimes they will even do this retroactively, charging higher rates on payments already made.
  7. Pay in full.  If you only swipe the card when you have cash available this is not a problem.  By paying off the balance each month there is no interest fee.
  8. Don’t max out the card.  Full credit utilization will lower a credit rating and also risk fees if there is an overdraft on the card.Students should also consider other options to the credit card.  If parents are assisting a great option is a secured credit card.  The balance on a secured credit card is prepayed.  That is the parents or students put money into the account, then the student charge up to as much as is put in.  They then pay for the charges the same as any other credit card.  This helps to build credit while avoiding much of the risk of traditional credit cards.

About the Author

Matt Brand

Matt Brand is QLR's money saving expert. His experience with credit cards and student loans have made him take a strong interest in personal finance, saving money and sharing his knowledge. He is passionate about teaching others how to avoid the trap and make smart financial decisions. View all posts by Matt Brand.