What Students Should Remember When It Comes To Student Credit Cards
The goal of every child is to become an adult as soon as possible. When that child becomes an adult and decides to go out on their own, they then realize that unfortunately, life isn’t as easy as they initially expected. Financial issues tend to show themselves within the first month of a student being on their own. This is when student credit cards come in. Although banks make it very attractive for students to get a credit card, it is very important that those students truly understand the responsibility that comes along with credit cards.
First and foremost, for students reading this article, IT IS VITALLY IMPORTANT TO YOUR FINANCIAL FUTURE THAT YOU DO NOT ABUSE THE PRIVILAGE THAT IS OFFERED TO YOU THROUGH CREDIT CARDS!!! Using credit cards irresponsibly can detrimentally effect your future financial stability. You can land yourself in overwhelming credit card debt and even worse, even harm your credit and make it hard for you to buy a house, rent an apartment, buy a car ect. I made this mistake as a young adult and I urge all students to think about that when taking advantage of credit card offers. Here are a few tips for you:
Never use a credit card to buy something you cannot afford to pay for in cash – I know what you may be thinking “If I can’t use the card to buy things I couldn’t normally afford, why do I even want a credit card?”. Although at first glance, this seems to be a valid argument, it is not! Banks don’t issue credit cards so that you can buy things you can’t afford. Banks issue credit cards to offer a safer, easier way to pay. It is much safer to carry a credit card around than it is to carry $5,000.00 cash everywhere you go. Using a credit card to buy something that you can’t afford to pay for with cash can make is so that the payments become more than you can afford and with that said, this can land you in a very bad financial situation.
Always pay your credit card bills on time – As a young adult, you can easily forget to pay your credit card bills. Buying a drink for that cute girl at the bar may seem to be more important than paying your credit card bills. It is important to remember how important that little piece of plastic is to your financial future and set your priorities accordingly. A good rule of thumb to follow is to make sure that you send your payments in at least 2 weeks before the due date. This will insure that the mailing system has time to get your payment to the bank and the bank has time to process the payment once it is received.
Never use more than 50% of your overall credit line – A credit line is the amount of money you are allowed to borrow against the credit card. If you have a $2,500.00 credit line, it is important that you spend no more than $1,250.00 using the credit card. I know “If you have a $2,500.00 credit line, why can’t you spend $2,500.00?”. The answer is pretty simple. Your credit line is based on a few things such as debt to income ratio, credit score, and a few other factors. The credit line on your credit card is the amount of money that the bank feels you would be able to pay back if you were to use ALL of your financial resources. However, using more than 50% of your credit line shows the banks that you are in desperate need of funds and may cause them to reduce your credit line. Not only that, it may have an effect on your credit score making it harder to get other loans in the future.
I know I said this before but I want to make sure it sinks in. IT IS VITALLY IMPORTANT TO YOUR FINANCIAL FUTURE THAT YOU DO NOT ABUSE THE PRIVILAGE THAT IS OFFERED TO YOU THROUGH CREDIT CARDS!!! Using credit cards irresponsibly can detrimentally effect your future financial stability.
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Comments
Comment from Darvin
Time January 9, 2012 at 4:14 am
Ho ho, who wuloda thunk it, right?
Comment from Heidi
Time January 7, 2012 at 1:51 am
Ah yes, nicley put, everyone.