Credit card tips for students
While having a credit card can help improve your credit score, it’s very easy to get sucked into a revolving door of debt. This is even more true for those that haven’t opened a card before and find themselves in need while in school. To help you understand everything you need to know about credit cards, we’ve put together a list of helpful tips for students.
Don’t Just Sign-Up
When you get offers for credit cards, you want to avoid signing up just because you can. Not only will each card affect your credit, but you’ll also see that different cards have different fees and monthly payments. By just signing up, you run the risk of having a higher monthly payment than expected. This is especially true when you factor in the payments for each credit card. If possible, calculate how much you can afford each month for credit card payments and don’t accept anything higher than that amount.
Research Card Features
You’ll also want to research the features of each card. Some cards will offer extra benefits, which might not be the best choice for those just starting out on their credit card journey. A few features that should be avoided for beginners include those that require a high spending amount to get rewards, those that charge a yearly fee for the benefits, and those that have a higher interest rate. All of this information should be available right before you accept the card and if you can’t find the information, you should check out a different option.
Overspending can cause a few issues, but it’s easy to get carried away and lose track of your expenses. Since you’ll have to pay off this amount every month and you’ll have extra fees for keeping a balance, you’ll want to spend underneath your limit. Know how much you can afford for credit card bills each month and try to not go over that amount. Not only will this show creditors that you can pay your bills, but it will also keep you from getting too far into debt.
Paying on-time is crucial when you open a credit card. There are a few reasons for this, which we’ll talk about below. For starters, paying off the balance every month will stop you from getting expensive fees added on. In addition, paying will show that you are reliable and will give you a better chance of getting approved for lines of credit or loans in the future. One final reason why you need to make sure you pay your bill every month is so you can have a higher credit score. The higher your score, the better options you have.
While unexpected things can happen at any time, you’ll want to avoid partial-payments if at all possible. One of the biggest reasons for this is because you’ll get added fees. If you don’t pay the whole amount, the creditor will add on fees daily or monthly until the amount is paid. In addition, it will be reported to the credit bureaus as a non-payment because it wasn’t the entire amount. This can lead to being sent to collections and your credit score dropping.
Don’t Open Too Many Cards
Having a credit card or two can be great for your credit and financial stability, but opening too many can actually have a negative impact on your credit score. Not only will creditors see all of the open cards, but they’ll also be able to see how you do with payments. If they notice that you have multiple cards and trouble paying them, your credit score and credit file can take a big hit. Start out with 1 or 2 cards and focus on them for a few months. Once you know you can add another card, try and apply and see if you can get approved.
Try Avoiding Fees
The final tip for students is to avoid fees as much as possible. There are plenty of cards out there that don’t have annual fees, monthly fees, or fees for reward programs. If possible try and find a card that doesn’t have any of these fees so you can focus on making the full payment every month.
By understanding and using these tips, students can have an easier time using a credit card correctly and safely. While you never know what might happen, you want to try and make sure you spend under your limit and pay your bill in full every month. Also, if you find that you just can’t keep the credit card, don’t be afraid to pay it off and close it. Do what’s best for you and your financial stability.