Here are seven tips every single student needs to know about managing student credit cards.
1. More is NOT Merrier
The person who said you can't have too much of a good thing definitely wasn't referring to student credit cards. The more student credit cards there are in a student's wallet, the more tempted they'll be to go on little spending binges.
A good rule of thumb to follow is to not have more than two student credit cards open at any given time.
2. They Aren't a License to Spend
When some students get their very first student credit cards, they like to think of it as a license to spend. This couldn't be further from the truth. That cute little designer purse can wait until you have a full-time income. Save your student credit cards for emergency purposes only.
3. It's Cash -- Spend Accordingly
When a student gets their very first student credit cards, it is too easy to forget that every time a purchase is made with the card, the student is going to need the cash to back that purchase up.
Sliding a plastic card for a $100 purchase usually doesn't cause as much pause for thought as handing over $100 in cash does.
Every time you use your student credit cards, make sure you understand it IS cash that you're spending.
4. You're Not a Big Shot
When you get a student credit card, it may be hard not to flash that card in front of your friends -- buying a few rounds of beer or a lunch or two. Avoid the temptation.
Flashing your student credit cards will not make you the big man (or woman) on campus. It will just put you into debt you don't need.
5. Pay On Time, Every Time
Every single credit card statement that you pay during your college years is going to affect you into adulthood.
What does this mean?
This means that you HAVE to pay your student credit cards on time each month or you're going to pay for it with bad credit in the future. That can result in not being able to rent an apartment or buy a home. It can even affect your job opportunities.
6. It's Not Nice to Share
Once your friends see that you have student credit cards, they may be tempted to ask you to borrow them or they might want you to let them use it to make a purchase.
Financial arguements can really put a strain on friendships.
Do yourself a favor -- unless you are willing to pay for your friends purchase and take all of the responsibility associated with it, don't let them borrow your student credit cards.
7. Don't Be Afraid To Ask For Help
Now that you're in college, you probably don't want to run to mom and dad for help unless you absolutely have to. Don't get too big for your britches when it comes to student credit cards.
It's a new experience and you're going to need the advice of those more experienced than you at times. Make sure you turn to your parents for advice when you have questions about your student credit cards.
Read the application and understand the terms the credit card offers. Some cards offer a 0% interest rate for the first six months and then make up for it later with high rates. If the student pays off the bill every month this isn't a problem, but if the student carries a balance those high interest rates can add up quickly. Students also need to be aware that only paying the minimum payment due is in the credit card company's best interest not their own. With high interest rates and low minimum payments the student can in effect end up paying double what an item cost.
Encourage your student to pay as much of the balance as they possibly can each month. A credit card shouldn't be treated like a debit card. The available credit balance isn't the same thing as the balance in their checking account.
Don't use the credit card for everyday expenses, pay cash. Charging lunch even a couple of times a week can build a balance up quickly. Save the credit card for when it must be used, for emergencies, or to spread the purchase of, say, text books out over the entire semester.
Some students use the credit card as a way to get cash. For example they'll be out with a group of friends having burgers and beers. They pay the entire bill and each of their friends pays for the student for their own tab in cash.
Instead of a traditional credit card start out with a secured credit card. The limit can be as low as $500. Knowing there is a limit can be helpful. A guardian or parent sometimes has to sign for these cards.
If you're not sure whether your student can handle credit, obtain a card with their name on it with one of the parent's accounts. Have the student call the parent each time they need to use the card. This will teach the student when it's appropriate to use a credit card and when it's not. It also provides a credit card for emergencies.
A credit card granted solely on the student's application, as opposed to a parent's, is the basis for building the student's credit history. It's tempting to abuse a credit card because it doesn't seem like real money. When writing checks the balance stares you in the face but not so with a credit card. Many times the student won't even realize the amount of charges until the bill arrives and it's heart failure time. Students often don't realize by not paying the bill on time, or even skipping a month's payment because they're short on cash, affects their ability to buy a car or even a home in the future.
Using credit wisely is a lesson every student needs to learn.
Both Max Anderson & Dee Power are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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