Based on the 2009 study by Sallie Mae, a leading financing company, the average college student has at least four credit cards yet only 17% of these cardholders consistently pay off their monthly balances.
Although having a credit card for students can be advantageous for building early credit history, teenagers must be very careful about how they spend with their cards. The modifications made to the Credit Card Law such as not being qualified unless you have a co-signer or proof of independent income are supposed to reduce the number of bad credit cases amongst college students.
If you’re a student who has a credit card, what can you do to prevent bad debt and the effects it can bring? Check out these tips:
Avoid carrying a balance. To avoid debt build up and maintain good credit rating, completely pay off your balance. Don’t be happy with just making the minimum due payment. It can save you a great deal by not paying the rate and additional fees.
Be discreet. Whenever you can buy in cash, do not charge it to your credit card. Even if you have a credit card with you, you should avoid using for your day to day purchases. Remember that everything your charge to your card might incur extra costs (APR, late fees, etc.) if you fail to pay it back on time.
Don’t borrow cash. Although your student credit card enables you to borrow cash advances, avoid using this feature. Such transactions are not covered by the grace period which means you automatically incur the cash advance interest rates the second you withdraw the cash.
Say no to tricky offers. Young people tend to be vulnerable to making quick choices. Do not ever sign up for a new card simply because the marketing package seems attractive. Credit card issuers frequently promote teaser rates or giveaways to entice new cardholders. If you currently have a student credit card, you should shun from other offers.
Do your homework. If you’re still shopping for your first credit card, don’t be hasty. Shop around and do comparisons. Keep in mind that it’s not just about finding a low rate. You’ll also need to make sure that there will be no hidden fees or unreasonable charges. Spend time studying the fine print regardless of how lengthy it is.
Speak up. Do you notice a change in your rate? Or did you incur additional fees in your bill? Do not be reluctant to speak up. Contact your credit card company and ask for a lower rate. If you have been a great customer, your Issuer would most probably give in to your request. Even if your Issuer refuses, iIt is still worth try.
If it’s not important, don’t charge it to your card. Be sensible in managing credit cards. Understand the distinction between your needs and wants. If it’s something that you might want but you don’t actually need, never charge it to your credit card. If you would like to buy something as a reward for yourself, save up and buy it in cash.
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