Credit cards can develop a bad reputation quickly when used incorrectly. Student credit cards can be useful at times, but it’s important to understand that responsibility is the key to making good decisions. College student credit cards are sometimes blamed for students racking up enormous bills.
In other cases, student credit cards are avoided like the plague, and the words ‘credit-card’ are almost cursed words at some universities across the world. This doesn’t have to be the case! College student credit card offers don’t have to be negative!
How To Use Student Credit Cards Properly
Average college student credit card debt is not well published, but certain institutions claim it ranks quite high. College students and debt is a touchy subject at some universities because of the reported high default rates.
You don’t need to avoid credit cards. They serve a useful and necessary purpose. Instead, learn how to manage their use responsibly.
Student credit cards can be:
- helpful in emergencies
- serve as identification
- protect against theft and fraudulent use
- useful when you have no cash available
What credit card companies know
The College Student and Credit: A Guide to Understanding Credit, Credit Scores, Student Loans & Credit Cards What most college students forget is that credit cards are actually lenders of money, just like banks. And while card users will get the bill for a certain purchase a month or so later, there is a credit balance that still needs to be paid off.
You made a purchase and there is a debt. Sometimes it’s difficult to remember exactly what all those small purchases were…
And then the bill comes… and it’s a bit of a shock.
Knowing this, credit-card companies are making more money than ever off the interest that accumulates from each unpaid balance.
When they offer low monthly minimum payments, college students can feel like they are the ‘winners’ in this transaction. But beware!
What’s actually happening with student credit card companies
Purchasing anything with a high interest rate credit card does not make sense, unless in an emergency. Or, you can use your credit card wisely and pay your balance every month.
That $75 sweater you just bought is actually going to cost you $200 if only paying the minimum monthly payment.
In order to avoid these complications, you need to learn to use credit cards wisely. Here are some tips:
- Only use credit-cards in emergencies – Problems with school fee payments (like your bank’s computers are shut down), car troubles, etc.
- Create a budget for yourself – For example, only allow yourself to charge so many dollars each month.
- Pay off the balance each month
- Research your credit card options to find the one with the lowest interest rate – You can find current interest rates on many online credit sites such as bank rate and then compare to see which one is the lowest
It’s not about avoiding credit cards when you are a college student, but rather, learning how to use them responsibly in order to manage your financial future effectively.
When you show that you can manage your money and pay your bills on time, you may come out of college not only debt-free but also well-educated (in money matters).
Protecting your information is important as well when it comes to your safety. Here are some items to consider to help safeguard your personal information:
As you learn more about proper credit card use, you’ll enjoy the freedom you can get. You’ll also be able to use credit cards to your benefit. How, you might ask? By acquiring points and cash back, which you can then use for new purchases. But first, be responsible with your credit card debt.