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| Tips for Using a Credit Card in College | College is a great time to prepare for your financial future, and using a credit card wisely is a great way to start building your credit history. Here are some tips for college students who think they are ready for the responsibility of opening a credit account.
Know where to start
One of the funny things about credit is that you need a credit history to get it. So you may be confused about where to start. Two of the best ways to build your credit history are with a secured credit card and a charge card. A secured card lets you borrow a pre-determined amount that you have deposited with the bank as security. Over time, your credit limit can grow, but you will not be able to get in too far over your head. Charge cards do not allow you to carry a balance. Instead you are required to pay in full every billing period so you get used to paying off your debts each month.
Shop around
It is good idea to shop around for the credit card that you can best manage. That means looking for a low interest rate, low annual percentage rate and low finance charges. Also keep in mind that some lenders will try to hook you with an offer for a card with no or reduced fees. Before you sign the dotted line, compare the fee-free option to the regular card with fees. You may find that you will pay higher interest on the card with no fees, which can end up costing you more in the long run.
Only buy what you can afford
Since being in college is usually synonymous with having little money, do not think of your credit card as a bottomless supply of cash. It can be easy to fall into the “buy now, pay later” trap, but this can cause you to graduate into some serious debt. Only buy what you can afford to pay off and avoid making impulse buys to compete with your peers.
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