Smart Spending with A Student Credit Card
If you are a college student and you have yet to get a student credit card, there are some important things you should know before you take the step of an unsecured line of credit. Establishing good credit is defiantly one of the most important decisions you will make during your young adult lives; everything you do with your new student credit card for the next year will determine how creditors in the future will react to one of your credit applications. This is why it is so important to develop smart spending habits now so you become used to handling credit as well as maintaining a consistently positive credit score.
How Do You Achieve Good Credit?
Good credit history is a direct result of your spending habits. These habits will probably form during the early stages of credit use, which is why a student credit card can be either a blessing or a curse. There are three main things you should do to make sure you stay on top of your credit score:
• Only charge recurring or planned expenses
• Make sure your statements go to an address where you can depend on getting mail
• Only carry balances you that can be paid off at the end of the month
Credit card companies deliberately give college students offers that will expire when a payment is missed, such as low promotional annual percentage rates, so missing even one payment can spell disaster to both your credit rating as well as your interest rate. It is also a little known fact that the most common reason for missed payments for a college student is a misplaced credit card statement, therefore making sure that your statement goes to a location where you can rely on getting your mail is incredibly important. Residence halls and dormitory type living situations are famous for losing said mail, so having your bills sent to an alternate location such as a post office box or your parents’ house is a very smart way to ensure that you receive your bills and can get them paid on time.
Establishing and Sticking to a Budget
Another way to keep in the good graces of a student credit card is to make frequent purchases with your credit card and then pay those purchases in full at the end of the month. One way to do this is by establishing your budget and paying for your expected expenses with your credit card. This way you know you can pay off your balance every month. If you can continue to do this for a number of months (usually six, depending on your student credit card issuer) you should at that time be eligible for credit limit increases or even rate reductions.
Carrying Balances On A Student Credit Card
As soon as they have lowered your rate and you have become used to making frequent payments, you can consider carrying balances on your student credit card from month to month. Carrying a balance will likely mean you have paid for an unexpected expense such as a hospital visit or course fee, or an expected expense such as a vacation or a new computer, and you are using your line of credit to finance this expense over a longer period of time. Because student credit cards usually have higher interest rates, it is important that you get expenses that will be longer than one month paid as soon as possible; otherwise, you are just lining the credit card issuer’s pocket with money that you might otherwise be keeping for yourself.
Student credit cards.com @ October 1, 2008