College is where students begin to act and think independently, and developing responsible financial management is an essential part of mature behavior. As students begin to learn how to live as adults, they must also learn how to wisely use credit cards – a crucial skill of adult life.
While there are risks to getting a credit line too early in life, there are also many practical reasons to have a student credit card. By building credit in college and establishing a solid credit foundation, students will find it is much easier to rent a first apartment, sign up for utilities and finance larger purchases later on. Good credit habits are skills everyone needs, and college is a great place to start building them.
Student credit cards are also valuable for covering unexpected educational costs, such as books and course materials. They can help to fund unexpected or high-cost purchases, like as car repairs and traveling home on short notice. Also, parents can take greater peace of mind in knowing their daughter or son is prepared in case of a financial emergency.
Students should be smart about using credit cards and make sure to acquire good financial habits. A good practice is to write out a budget and stick to it. Track the amounts of everything you spend, including both the major stuff (like rent and car insurance) and the minor things (like gas and coffee). If you’re sure not to overestimate what you can actually spend, you won’t suddenly be surprised by unmanageable bills.
Also, try to make sure you can pay off your total monthly balance. Credit cards become difficult to manage if you spend beyond your means, and if you start accruing interest fees on top of high balances, you’re not only damaging your credit rating for the future, but you also aren’t developing the right spending habits. Even if you can’t pay off your full monthly balance, it’s essential that you at least pay your credit card bill on time, which builds a good credit record.
Try to reserve the majority of your credit card purchases for necessities and emergencies. When charging a purchase, think about whether the purchase is a necessity. If you don’t need it, and can’t afford it, don’t plan on paying for it later. Whenever you have any questions about how to use your card responsibly, speak with your parents or others who have experience with financial responsibility.
Lastly, when you’re ready to get a credit card, do your homework! Credit card solicitors go to universities and try to get students to sign up on the spot. Too often, students don’t realize the benefits they miss by not doing a little bit of research. Just as with picking class schedules, many factors should be taken into consideration when signing up for a new credit card, and students should research and compare their options before committing to any single credit card. With a little bit of comparison, you can find a card that has a low APR and offers plenty of rewards.
If you’re a student unsure as to how you’ll handle a credit line, consider getting a secured credit card. With secured cards, you leave a deposit, covering a portion or all of your credit line. That way, if you discover you still have a lot to learn about financial responsibility, you won’t find yourself in huge amounts of debt, hoping for your parents to come to the rescue. If you choose not to get a secured credit card, and are still unsure about how you’ll handle credit, you can always get a regular student credit card and opt to keep the credit line low.
And remember, just because you’re getting a student credit card doesn’t mean you have to pay high interest rates or sacrifice on rewards! In fact, with some cards, it’s the opposite. There are student cards which cater to students through rewards programs, allowing you to earn music, entertainment and clothing. Other cards don’t charge annual fees and some offer great introductory packages.
As a student, credit issuers usually start you with a lower credit limit, a few hundred dollars being the norm. From there, you can quickly increase your credit card’s limit by paying your bills on time, and proving to be a reliable credit card user.
If you are prepared to begin using credit cards wisely, and have considered and researched the different factors, shop around, compare cards, and find one that helps you build your financial future.
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