According to a survey conducted by Nellie May in 2005, the average freshman carries more than $1,500 in credit card debt. By the time they graduate from college, the already have debts waiting to get paid even before they get hired for their first job. Truly, that can be a scary situation.
However, you can take control over your credit card use to avoid the risk of bad debt. Instead, you can use your credit cards for students to build solid credit. Take a look at the following guidelines for college students who use credit cards:
Find a reasonable credit card. Your best partner would be a student credit card with a good interest rate that lasts. While some cards offer zero interest, it may only be applicable for a short time. Afterwards, you could be stuck with a high-rate card. Thus, before signing up your application, don’t forget to check the APR.
Be aware of the fees. Aside from a good rate, you should choose a student credit card with reasonable fees. Check the annual fee, late penalty, over-the-limit fee, and transaction charges that you may incur and do your best to avoid penalties by submitting your payments on time.
Rewards or without rewards? Would you like to have a student credit card with rewards? Reward credit cards can be beneficial but you need to be very careful on how you use them. Some reward cards have very high interest rates which can easily put you in bad debt situation if you fail to pay off your full balance.
Stick with one credit card. One credit card in college should be enough for you to build solid credit. Since you do not have a permanent job to support you, it’s best to stick with just one card. Keep in mind that having excellent credit doesn’t depend on the number of credit cards you have in your name. What matters most is how you manage your account and how timely you are with your payments.
Be smart with your spending. Of course, you need to be smart about your own spending in order to avoid falling in the trap of bad credit. Make sure that you will be able to pay off your charges before your due date. It is strongly recommended to pay off your full balance rather than carry over your charges to minimize the risk of debt build-up.
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