Be Credit Savvy

Many credit card companies would love to get a lot of students to have credit cards who do not know how to manage their money. When we don’t manage our money properly, we will shop wildly without realizing how much we’ve spent, using our credit card for unnecessary things; we will forget to pay the bill running up a huge side debt in late payment fees; and we will carry a balance which will give the credit card company the ability to charge us interest on the things we bought that we don’t really need. Becoming credit savvy will help us to avoid these credit pitfalls.

When you get your credit card application, be sure to read it. Many times, simply reading it will wake us up to the responsibilities that such a card carries. There is a lot of fine print but it is important fine print if you decide to use that particular credit card company’s services.

Avoid impulse buys while using a credit card. I have been there before. The deal was too good to be true and it would fit me just perfectly. Except for the fact that after I bought it, I remembered that I actually had to pay for it but when the next month came, I didn’t have the money then either. Then that cost me interest money, sometimes effectively doubling the cost of my “great deal” impulse buy.

Emergencies always come around. The car radiator has to be replaced. You forgot about a very expensive book that the professor said you would need later in the class. Your mom is sick and you have to take a few days off work to rush home and help until she’s back on her feet. Yes, there are real emergencies. That’s when the credit card should come out of hiding and not before. As much as possible, set up a fund for such emergencies and save it very carefully. However, be wise in your use of the credit card and don’t go overboard charging things you don’t really need anyway.

In your wallet carry only one card with a low credit limit. Use that card for emergencies and leave the others where you will have to dig for them, all the while questioning yourself as to the validity of the purchase you are about to make. Some have even suggested freezing the card in a block of ice. Then you will have to wait until it thaws to use it, by which time, you may have decided you didn’t really need that anyway. Let your parents hold all but one card for you at their home or in their safe. Then you will have to explain to someone else why you need the card, hopefully seeing that your arguments for “need” really are arguments for “want.”

Becoming credit savvy is not easy and sometimes we have to learn very hard lessons to get to that point in our lives. Start off using credit properly and you won’t have to go through those hard lessons.