Tips to be a Credit Smart College Student
Shop around for the best card. Don’t pick a credit card just on a whim. Take the time to check out what is being offered and pick the one that best suits you. Some factors to keep in mind include:
- The annual percentage rate (APR).
- The annual fee (if any).
- Length of the grace period. (The grace period is the time during which you can pay your bill without having to pay interest.)
- The dollar amount of penalty fees.
- The balance calculation method.
Set up and live within your budget. Be sure you know how much money you have in the bank, and how much you will need to pay when your credit card bill arrives. Pay your credit card balance electronically each week or after each purchase. Be sure to pay your statement balance in full when it comes due.
Use prepaid or debit cards. This will ensure that you are not spending money you don’t have. However, be sure to record all of your charges to avoid any overdraft fees.
If you can eat it or drink it, or if it costs less than $20, use cash or a debit card. Using credit cards for small purchases can be misleading and unwise. Paying with a card doesn’t seem real – after all it’s not money you are taking out of your purse or wallet. But those small purchases can add up very quickly, and you can soon find yourself owing more than you can pay.
Establish and maintain good credit. How you handle credit today will have a significant impact in the future. Banks, potential employers, utility companies, insurance companies, and property management companies all rely on credit reports or credit based data when you apply for a loan, a credit card, a job, apply for insurance or complete a rental application, or sign up for utilities. You can even find yourself being denied a student loan because of a bad credit report.
Know what’s on your credit report. You can get a free copy of your credit report from each of the three credit bureaus every 12 months. The report can be ordered online at www.annualcreditreport.com. Additionally, many banks and credit card companies are now offering free access to your credit report and credit score.