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Student Credit Cards: Dos and Don’ts

There are several reasons you should be cautious as a student when you have a credit card. Most usually students have a limited income which needs to be spent wisely. Also, after graduation it can take a few months to get a proper job in the career field of choice. Since money will be limited and student loan debts will start to be due one should not have too much other debt to contend with.

Alarmingly there is a high rate of debt among graduates according to the National Foundation for Credit Counselling. It is good to have a credit history after graduating, but it should be conducted with some aplomb. In other words, using a credit card for purchases that can be paid off is quite helpful to building credit, but using it for extreme purchases that are too hefty to pay off can actually have a negative impact.

Here are some of the Do’s for using a student credit card:

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• Obtain a student credit card
• Only use the credit card for what you know you can pay off. In other words, if you can pay off 20 pounds and only 20 pounds for that month, use it for that amount only.
• Build your credit history. By using the credit card you are showing you can pay it off properly. This means you must pay it off on time and in full.
• You should start small with a low credit limit that you never hit maximum on. For example 300 to 500 pounds is a good credit limit to have.
• You can ask for credit limit increases after you have had the card for six to twelve months. You never want to go up to that new credit limit, but the award of a new credit limit has a positive impact on your credit score.

The Don’ts:

• You should never carry a balance on the credit card that is more than 30% of the credit limit. This can have a negative impact on your credit score.
• You do not want to go for the first credit card offer you are mailed. Instead, compare credit cards to find the best credit card for introductory options and average APR.
• Do not mistake the credit card for cash. It carries heavy fees if you take out cash or use it by too much as a means of cash without a way to pay it off. Your income needs to be considered when you use the card.
• You do not want to just pay the minimum on the credit card. You have to pay more in order to pay it down and spend less money using the card. The minimum can mean a small balance takes years to pay off.
• Never charge more money than you can pay off in a month.

You should always learn more about credit cards, so that you can keep a good financial foundation while you are in college and after you are done with college.

Filed under: Credit Card Deals by Admin JHS