Not long ago, applying for a student credit card is as easy as buying your favorite pair of jeans or shirt. As soon as you think you’ve found the right one, you can simply take the item to the cashier, pay for it and take it home with you. In the same way, you can simply sign up and submit your student credit card application online and get an approval within a few minutes.
However, the New Credit Card Law has made a few restrictions for young people who want to own a credit card. Today, a student can only qualify with a co-signer or if he/she can show proof of independent income.
The amendment to the credit card law was meant to cut down the number of bankruptcy and bad credit cases, particularly among students. With a parent or an adult as a co-signer, a teenager can have someone to guide them in managing a credit card account.
In this post, let’s talk about the steps that you can do to build up good credit history using your student credit card:
Steps to build good credit history with your student credit cards
Choose wisely. Don’t get a credit card for the wrong reasons. Do not rush into signing up just because a card offers a promotional giveaway item or a low introductory rate. Always weigh your options, check out all the fees involved, and understand the terms of the Issuer. Ask your parent or someone with good credit history to help you out when doing comparisons.
Stick with one card. One student credit card should be enough for building credit history. Since your main priority is your studies and you do not have a permanent job yet, it’s only practical to stick with one credit card to handle.
Charge only what you can afford. If you’re going to charge a bill to your card, make sure that you can pay it in full on time. If you have any doubts, don’t charge it to your card. Remember, a $25 purchase can easily balloon to $50 because of the additional interest rate and late penalty charges.
Always pay the full balance. To avoid the interest rate and extra fees, cardholder must pay the full balance each month. Although you can submit only the minimum due payment, such a habit can be risky. The longer you prolong your balance, the bigger your debts become.
Do not submit multiple applications. Some students try out their luck by submitting multiple applications to different Issuers. Others sign up with no intention of getting the card just for a free mug or tee shirt. Watch out! You could end up with more credit cards than you can handle. Even worse, too many inquiries in your credit report can affect your rating.
Ask advice. As a new credit card owner, you should seek advice from your parents or from a family member who has more experience in handling credit. If you got your first credit card through the help of a co-signer, keep in mind that your co-signer’s credit history and your own credit history are both on the line. Be responsible in using your credit card.
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