Proper Use Of Student Credit Cards
One of the best feelings that young adults face is the day that they go to college. However this feeling of freedom is shortly followed by a feeling of fright. Young adults start to realize the responsibilities of having to take care of their own financial needs. One of the first things that most college students will want to do is get a student credit card. Not knowing how to use these cards can detrimentally effect the financial stability of these students for years. Here are a few tips to ensure that student credit cards are used responsibly.
Find the right credit card – There are many student credit card offers and choosing the right card for you can be just as important as using the credit card properly. When looking for a student credit card, make sure you pay attention to the interest rate, annual fee, and rewards offered for using the credit card. When looking at these factors, make sure that the interest rate and annual fee are competitive based on your credit history and the rewards are something that you will want to use based on your recreational habits.
Never use more that 50% of your credit line – This is a commonly unknown idea. If you have a credit line of one thousand dollars, it is important that you spend no more than five hundred dollars on the account. Spending more than 50% of your credit line tells banks that you are in dyer need of money and may have a hard time paying back your debts. Maintaining a balance that is higher than 50% of your credit line can bring down your credit score detrimentally effecting your interest rate and ability to obtain future loans.
Always pay your credit card bills on time – On time payment is another crucial factor in utilizing credit cards responsibly. A general rule of thumb to follow is to send your payment to the bank two or three weeks early to allow time for mailing and processing of the payment. Not paying your credit cards on time can cause banks to increase your credit card interest rate to penalty rates that can be above 28% as well as harm your chances of being approved for new loans in the future.
Only purchase what you feel you can afford to pay off – This concept is the one that haunts many people. Unfortunately, credit cards have become a way that people are able to have the luxuries that they know they can not afford. Don’t allow yourself to fall into this statistic. If you can’t afford it cash you should not buy it. Banks started credit cards as a safer, easier way to pay not a way to afford things that people normally could not.