Build Good Credit with Student Credit Cards
Student credit cards are offered to graduating high school seniors and to college students over 18 years of age. This is about the only opportunity when you'll be offered a credit card without having any credit history, and it's not even a secured credit card. This is the ideal opportunity to start building your credit history, especially if you use your card wisely.
Responsibly using a credit card granted to you at this time will allow you to begin building a good credit history. Credit cards can be used for traveling expenses, when you may not want to carry a lot of cash. They are also helpful when faced with emergency expenses or moving to a new town (until you establish a checking account where you live).
If you do use your credit card, pay off your balance in full when the statement comes in (if at all possible). If you are unable to pay off the balance, always try to pay more than the minimum amount due on your student credit cards. While it may be tempting to only pay the minimum (and use the extra for pizza), realize that you'll be making credit card payments for a very long time.
To illustrate this point, consider that you have a credit card with a $2000 balance that charges 18% interest. If you only make the required 2.5% minimum payment each month, it will take you twelve years and nine months to pay it off. On top of this, you will have paid $2230.83 in interest fees. Keep this in mind when you're tempted to buy something you really don't need, thinking that you can just pay it off in time.
Using Student Credit Cards Properly
- Compare interest rates and terms on various credit cards before applying.
- Always pay your bill on time to avoid late fees.
- Be aware of your credit limit, and avoid penalties by not going beyond it.
- If you can't pay your balance in full each month, at least pay more that the minimum due.
- Check your credit report at least once a year for inaccuracies. Dispute any incorrect information on your student credit cards by writing the credit bureau that supplied the information.
- Memorize your PIN number. Do not write it on your credit card or keep it in your wallet.
- Keep information on your credit card (account numbers, phone numbers, etc.) in a safe place, separate from your cards.
- Immediately contact your credit card company if your credit cards are lost or stolen.
- Notify issuers of your credit cards of any address changes.
Parents can teach their teens on how to manage credit responsibly while they are still living at home. To learn more, read the following article on preparing your kids for college credit cards.
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