Young people often receive conflicting advice about whether to get a credit card.
On one hand, it’s a useful way to build credit and learn the ropes of personal finance.
On the other hand, accumulating debts you can’t pay off is a real danger for those who are inexperienced in the ways of the world. Nevertheless, the time will probably come when you decide you need the convenience and flexibility a credit card can offer.
So it’s better to go into it with your eyes wide open than to assume you can go on forever without one (though if you can, more power to you).
Here are a few pointers, largely from personal experience, on how best to wield your plastic:
1. Start with a very low credit limit.
$1000 is probably as much credit as you ever want to rack up on a college student’s budget.
You may be offered a more normal salaried person’s line of credit, like $5000 or so, but you’ll be tempted to make some bad decisions if you’re kept on that long of a leash.
2. Look for special “student” cards.
Many credit card companies offer products specifically designed for students.
The perks of these might include a low limit as mentioned above, special promotional offers targeted at your demographic, and financial counseling to help you understand how to manage your money (or lack thereof).
3. Make a budget and live within your means.
Keep track of how much money you have coming in.
Plan to spend only the money you have in the bank. Use your credit card for true emergencies or the occasional big expense you want to spread over several months (like a trip or Christmas presents for your friends and family).
4. Pay down your card balance as quickly as possible.
Interest is constantly accumulating.
Keep your credit card balance at zero dollars whenever humanly possible.
5. Don’t drink and shop.
I don’t know if you’ve heard the hype about how here’s an epidemic of late-night alcohol-induced online spending sprees going on.
You may be tempted to head back to your dorm room after a night of partying and start looking for a sweet new pair of kicks...as the slogan goes: just (don’t) do it!
6. Don’t forget about student loans.
For many students, you’re already incurring debt simply going to school.
Don’t add to that burden any more than you have to. Take a long-term view of your finances...believe me, I wish I had.
(Truth be told, many of these lessons were ones I learned the hard way.)
7. Look into rewards programs.
Interest rates being equal (you should shop around for the lowest one you can find), always get a rewards card.
Frequent-flyer miles can come in handy to fly home for Thanksgiving, and as mentioned above, student cards may have offers that are custom-designed to feature the merchants, products, and services that students particularly love.
That’s all for now, best of luck in building your financial future!
About The Author
This is a guest post by blog junkie and full time writer Eliza Morgan. Eliza enjoys imparting useful and practical lending and debt advice to the blogging community, often at businesscreditcards.com. If you have any questions email her at elizamorgan85@gmail.com.
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