Unless you are independently wealthy, using credit cards in college is one of those necessary evils. No matter how necessary it seems, when you are considering getting a credit card for college, there are a lot of factors to consider before signing anything. Making an educated decision on what card to get and how to use it will be choices you will be thanking yourself for 10 years down the road.
Picking the Right Card
Many colleges have agreements with credit card companies that allow them to set up shop on campus and solicit your business. These companies sometimes partner with the school and offer affinity cards hoping to further entice new students. These cards look cool and show student pride but may come with high interest rates. You should always do your research and read the small print before signing any credit agreement. Find out what happens if you make a late payment. Does your interest go up? Is there a grace period for late payments? Get all your questions answered so that you can pick the absolute best card for you with a solid knowledge of what exactly you are getting yourself into.
Start Out Small
Because you are just beginning to establish your credit, your credit card offers may come with very high interest rates. You want to avoid having a high balance on the card that will continue accumulating interest each month, dramatically increasing you bill. The best way to avoid racking up interest is to pay off your balance, in full, each month.
You should pick a card that has a very reasonable credit limit available to you. $500 is much more reasonable for an 18 year old than $3000. If you keep the limit smaller, you will be much less likely to overspend and more likely to be able to pay off the balance in full if you do.
Have a Plan
You will be much more successful using your credit card and establishing a positive credit history if you have a plan. Allow yourself to use the card for emergencies, and define clearly what an emergency is for you and stick to it. Leave the card in a safe place, not in your wallet, to avoid the temptation to impulse shop. You will thank yourself later.
When in college it is important to remember that what you do now to build your credit will greatly affect your future. Making good choices will help you protect your credit score for the future, making it much easier for you to get a car or house once you graduate. Having good credit could also help you get a job. Businesses are also looking at an individual’s credit now during the hiring process for jobs. Employers see a good credit score as an indication that they are dealing with a responsible person. You should enjoy your college years, but do it responsibly and you will thank yourself later.
George Gallagher is well versed in helping students successfully manage their finances while in college. He also finds himself helping young people after they graduate with their student loan consolidation questions.