Owning a credit card as a college student can give you a substantial head start in building solid credit. Building a good credit score can go a long way after you graduate by helping you get loans, buy a home or car, and in some cases, find future jobs. These tips will help you learn some responsible credit habits while highlighting some of the significant dangers that come along with them.
Credit Card Debt
Debt can build up quickly with a credit card. It’s important to know that you will be asked to pay interest on your outstanding balance at the end of every statement period. If you don’t stay on top of your credit, you can easily find yourself in a very bad situation.
As a good rule of thumb, do not think of credit as “additional money†but rather a more convenient way to spend what you already have. You must pay back everything you spend. Don’t let the fear of credit card debt hold you back from using your card, but be mindful of your spending.
Unfortunately, bankruptcy can be common among college students, and most will talk to a bankruptcy lawyer to find out their options for dealing with student loans and credit card debt.
Cash Back Deals
Cash-back deals are a great way to make the most of your credit card. Depending on the card you choose, you can get specialized cash-back deals for things you purchase most, like gas and food. These cash-back rates are usually not higher than 1%-3%, but getting a few dollars back at the end of the month for things you need to buy anyway isn’t a bad deal. When choosing a card, actively look for one with a flat cash-back rate or several rates for specific spending habits.
Keep Track of Spending
This goes along with managing credit card debt and seems straightforward, but keeping track of how you spend is essential. You should make a point to check your account balance every few days and see what you’re spending the most on. The point is to make sure you don’t rapidly descend into debt and stay on top of your credit.
Always Pay Your Bill On Time
We know that using credit cards properly can help you build good credit, but that’s only if you pay your bills when they’re due. Not paying your bills on time can negatively impact your credit and lead to late fees, higher interest rates, or if you fail to pay your bills at all, you can have your account closed.
College is a great time to start spending with a credit card. Take the time to do your research and find the best card for you that has acceptable interest rates, cash-back deals, and low APR. The helpful habits you learn can be with you into your future, along with any debt you incur.
About the Author
Veronica Baxter is a writer, blogger, and legal assistant operating out of the greater Philadelphia area.
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