Owning your first credit card can be an exciting experience. However, being a credit cardholder means more than just easier spending. Remember that you have a responsibility to pay your debts on time and use your student credit cards according to the terms of your credit card company.
Using Student Credit Cards to Build Good Credit
As a student, how can you use your credit card for building good credit history? Check out these top ten tips for you:
Charge ONLY if you can pay it back in cash. To be on the safe side, you need to consider repayment before charging anything to your card. Will you be able to pay back that purchase on time? Do you or will you have the cash to make full payment on or before the due date? If you have doubts, the wise thing to do is to skip the purchase and wait until you have the means to do so.
Know your limit. Credit cardholders are prone to exceeding their credit limit. Nevertheless, there’s a very good reason why you should stay within your limit. For one, you can avoid the overdraft fees. Two, you can maintain a better credit standing and avoid the risk of uncontrolled debt.
Choose a no annual fee card. When choosing a college credit card, better choose one that carries no annual fee. Annual fees can range anywhere from $20 to $50. There are reward credit cards with annual fees ranging from $50 to as much $100. As a student, you should get a credit card with a reasonable interest rate and minimal fees.
Pay on time. Paying on time can save you $15 to $30, depending on the student credit card you have. Aside from avoiding the penalty fees, being a prompt payer can significantly raise your FICO score by up to $35%.
Check your statement of account regularly. Check your monthly billing statement and check your account regularly especially if you have an online access. If you notice unfamiliar charges, contact your credit card Issuer right away. Consumers have the right to dispute incorrect or unauthorized charges and you should exercise this right if you need to.
Don’t use your card for borrowing cash. There are student credit cards that allow you to borrow a cash advance through the ATM. Still, you should be aware that cash advance transactions are not covered by the grace period so you instantly incur the interest rate the moment you make the withdrawal. For most cards, the APR on cash advances are often higher than the interest rate applied on balance transfers or purchases.
About the Author