From textbooks to late night pizza runs, you’re going to make a lot of purchases in university. Since you won’t always have cash on hand, credit cards become very useful. Student credit cards are a great first credit card for students because they are specially designed for students and usually don’t require an income. By getting a credit card early and paying off all of your monthly balances on time, you can establish a good credit score which will help you later in life when you buy a car or a home. Here are just a few credit cards out there, and the benefits they offer:
Credit cards are a great way to make purchases, if you’re careful. Some credit cards offer reward points, cashback, discounts, extended warranties and other perks to help make the most out of your money. However, there are also risks associated with using these cards. From identity theft to an unpaid balance, credit cards can put you in a lot of trouble. Here are some tips on how to steer clear of common credit card mistakes:
Spend what you can afford. This may be a no-brainer but some people tend to forget how much money they actually have when their credit limit is really high. If you can’t pay for it, don’t buy it!
Keep track of all of your spending. Not only will it help you make smarter purchase decisions and cut down on excessive spending but it will also help you when you’re a victim of identity theft.
Keep your card safe. Identity theft is a huge issue and if you’re not careful, it can cost you greatly. Avoid suspicious websites and giving your credit card information to others.
Avoid annual fees. Don’t be blinded by promises of reward points and cashback when they also have a hefty annual fee. The price of the annual fee might end up cancelling out the price of all the rewards you’ve earned. There are plenty of other cards that offer these rewards with no additional annual fee.
Avoid making interest payments. In other words, pay off your balance in full each month. Paying the minimum each month may be enough to satisfy the credit card company, but it will also prolong and increase your debt. Especially since interest rates are really high on student credit cards (approximately 19%-20%), this can make it even harder to pay off that debt.
Don’t get one if you don’t think you’re ready. The whole purpose of getting a credit card as a student is to establish good credit history. If you are unable to pay your balance, this is going to hinder your ability to meet future financial goals. You need good credit to help make purchases like a car or a home in the future so be careful with your card!
Choose wisely. Don’t apply for the first credit card you see. Research different credit cards before choosing one. Check out our article comparing different student credit cards for help.
Check out this video on some more common credit card mistakes and how you can avoid them: