If you talk to anyone about college, you’ll probably hear some credit horror stories. If you ask your elders, they’ll probably say that credit is insanely important. If you talk to the credit card companies, they’ll probably tell you to get as many credit cards as possible. However, credit cards can be a good thing if used properly. Here are some things to think about when selecting a credit card in college.
Yes, you should get a credit card. I know too many people who are terrified to get a credit card in college. While many college students do get into a scary amount of debt, there’s no reason to be afraid of credit. Just HAVING a credit card doesn’t make you go out and buy everything in the world, thereby throwing yourself into an ever-deepening pit of financial chaos. Too many people blame all their financial woes on credit cards when they probably shouldn’t. Also, getting a credit card and making the payments is a fantastic way to increase your credit score. With my credit card, I generally use it for small purchases, and pay it off in full every month. The bottom line is that if used responsibly, credit cards can be quite helpful. Just be sure to avoid those pesky late fees.
When getting the first credit card, outrageous percentages are unavoidable. Here’s another thing, credit card companies LOVE offering you more credit. It’s really quite amazing how when I was paying my balance off in full every month, very few companies were bothering me. The second I just started making minimum payments (and therefore carrying debt), I started getting tons of credit card offers. Companies want me to get a new credit card and pay off the old one. In a perfect world, everyone wouldn’t be attempting to take all your money. Alas, we do not live in a perfect world. In any case, I’ve found that there’s little difference in percentages for starting credit cards. Do your research, and find credit lines, and APRs that work for you.
Take advantage of rewards. I am a big fan of reward credit cards. There are all sorts of rewards available out there. Commuting students should consider a credit card that offers gas rewards. Frequent flier mile rewards are also fantastic (especially if you go to college far away and have to finance the trip home by yourself). I use the Citi mtvU Platinum Select Visa Card, which offers ThankYou® reward points that can be used on many different items including frequent flier miles, gas cards, gift cards, electronics, and more. Currently, I almost have enough to get a digital camera. Credit cards also offer rewards in the form of bill payments and student loan credit. Read into what the credit card company offers before you make your final decision.
Start with one credit card, and stick with one. Too many people in college get multiple credit cards. My sister signed up for 10 credit cards in college just to get the special offers, and then canceled them promptly after. This destroyed her credit. Start slow, with only one credit card. If you feel that you need another, then consult your finances before making a decision. I find it’s best to ignore all that junk mail you get once you have the first credit card. After you establish your credit, you can think about getting a lower interest credit card. Until then, be smart and stick with one.
All and all, you shouldn’t be too scared of credit cards. You may consider it a bad thing, but I find my credit card to be extremely useful. If you manage it, make payments on time, and don’t let your spending get out of control, you’ll probably have a good credit building experience. If you are hitting a rough patch, why not try setting some financial goals? Selecting your first credit card can seem like a daunting task, but if you do your research, I’m sure you’ll end up fine and the debt monster won’t eat you up. If you’re still unsure, I’d suggest seeing where you stand credit-wise. Credit reports can be obtained once every 12 months from AnnualCreditReport.com, which follows the U.S. Governments mandate of a free credit report for persons once a year. Whatever you do, don’t go to freecreditreport.com, because it’s a scam. I am a firm believer that one of the fastest ways to build credit is to have a credit card and use it responsibly.