Now that you are in college, you may find that you need a credit card. When used responsibly a credit card can be a great tool to build your credit and help you pave your way to future financial success.
People with better credit scores are awarded lower interest rates and using a student credit card in a responsible fashion is a great first step to increasing your credit score and qualifying for the best interest rates (and insurance rates).
Here are 10 college student credit card tips:
- Once you are 18, apply for one or two credit cards to see if you are accepted.
- Pay attention to the interest rate that you are being offered. Compare several cards to find the best rate.
- Do not sign up for any cards with an annual fee. There are plenty of credit cards offered without a fee.
- Be sure to read through or have the terms and conditions explained to you. This will help you avoid any costly financial surprises down the road. For example, most cards charge a higher interest rate or fee if you are late on a payment.
- If you are opening your first checking account as well, you can link a credit card to your account as overdraft protection. This is a good way to protect yourself against overdraft fees and keep your account in better standing with the bank. Working with a bank can also help reassure you that you are working with a legitimate financial institution. College students are given a lot of credit card applications on campus, while many of these offers are legitimate you may feel more comfortable working with a bank.
- You can also search for deals online to find the best credit card and rate for you. Searching online is a quick way for you to compare the many offers out there and which one suits your needs the best.
- If you have specific interests or hobbies, many companies offer rewards that you can apply towards purchases of your choosing. Some cards offer points for gas, travel, or cash back. These are a great benefit to having a credit card and using it responsibly.
- You may need a credit card to qualify for certain events throughout your college experience. For example, if you sign up for cable you may need to pre-qualify with a credit card. If you attend a conference, the easiest or only payment option may be through a credit card. Following these tips can help you build your credit and establish good spending patterns early.
- If you spend money wisely, you may want to make one large purchase and pay a portion of the charge each month and on time. Paying down on the balance over time each month will help to build your credit. You will want to calculate the total cost of the purchase and how many months it will take you to pay it off. If possible, you will want to pay it off in the same amount of time as your low, introductory or zero percent interest rate.
- A credit card can also be used to pay a recurring, monthly bill. The key for this to successfully build your credit is to make sure the bill is paid in full each month. Paying on time will help raise your credit score. The better score that you have, the better offers you will qualify for in the future.
And although you may not be looking to buy a house now, qualifying for a mortgage that’s just 1% lower can save you tens of thousands of dollars over the life of the loan. Play around with a Mortgage Calculator and adjust the interest rate to see for yourself. Remember, the better the credit score, the lower the interest rate will be for mortgage loans, auto loans, personal loans, and credit cards. A good credit score will even get you a discount on your auto insurance. And believe it or not, having a bad credit score could prevent you from getting that dream job after graduation.
Credit cards are a great tool in life and using them wisely is one of the most important financial tips anyone could ever give you. If you are going to apply for a college student credit card then above all else – use the card responsibly!
- Do I need a credit card before a mortgage?
- College Students and Credit Cards: Hit or Miss?
- Credit Cards for College Students: Wisdom or Folly?
- How to Pay for College
- Associated Bank Visa College Rewards Card
- Citi Platinum Select Card for College Students
- Fresno State University Credit Card