College Students And Credit Cards
When it is time for a young man or woman to be sent off to college, let’s face it, it’s a great time in their lives. However, the burdens of financial struggles tend to be overbearing to many college students. Unfortunately, the first place that many students turn is student credit cards. Now, I am not saying that students should not get credit cards however, the reason for getting a credit card and how they tend to use them are a bit scary to their future financial stability. With that said, if you are a student, before you apply for a credit card, I urge you to read and understand this entire article! This will help you to achieve financial stability!
The first thing that you as a college student need to know is that credit cards are just as much an important piece of your financial stability as they are the weapon that can cause self destruction. Proper use of credit cards will increase your credit score. This increase in your credit sore will allow you to qualify for lower interest rates on future loans like auto loans and mortgages. However, improper use of credit cards can cause you to have to pay increased interest rates or even worse be declined for important future loans. As a matter of fact, improper use of credit cards is one of the leading causes of bankruptcy in the United States today!
Now that you know how important it is to use your credit card properly, it is time to talk about what to look for when applying for a credit card. The first thing you are going to want to compare in the offers available to you is the interest rate on the account. Credit Card interest rates are the means of issuers making their money. The more the credit card issuer makes, the more it costs you! Therefore, it is best to look for a low interest rate. Also, there are not too many rewards credit cards out there for students however, every once in a while you will come across one. Keep in mind that rewards credit cards generally have higher interest rates and try to judge if the reward is going to be worth the amount of money that it will cost in interest and finance charges. Finally, you will want to look at annual fees. Some credit card companies (none of which you will find on this site) like to charge ridiculous annual fees on student credit cards. If your annual fee is more than $95 then you are paying too much!
Using Your New Credit Card!!!
As you can see, the use of your credit card is very important, hence the huge heading centered above! With that said, here are some tips on how to use your credit card properly:
- First and foremost, never spend more than you can afford to pay back within 3 months. This will ensure that you will never get caught in the debt trap that many people suffer with each and every year!
- Another great tip is to not spend more than 50% of your overall credit limit. The credit limit on your credit card is the maximum amount of money that the credit card company is willing to allow you to borrow using your credit card. However, consumers who face financial hardships tend to spend drastically more than 50% of their credit limit. By spending less, you avoid signs of financial hardship and higher interest rates.
- Always make your payments on time. It is a best practice to send your credit card payments in at lest 1 month in advance. This will ensure that the issuer has time to process your payments!