credit card advice
Recent college grads leave school with a lot on their minds. There’s the job search, deciding where to live and generally figuring out how to transition from an academic to a professional life.
There’s another thing that should be added to the list — building a good credit history. One of the best financial decisions you can make in your life is to start early with building good credit habits.
This will help you in numerous ways — when you establish and keep good credit, it means you get to keep more of the money you earn.
How to use credit cards to build credit
One of the best ways to establish and build credit history is by getting approved for a credit card.
Many college grads took advantage of the special credit card deals that were available while they were in school. Even if you didn’t, there are plenty of opportunities to get the right credit card for your new lifestyle.
When considering what type of credit card you want, there are some questions you should ask yourself:
- Do you plan to carry a balance or pay the charges off each month?
If plan on carrying a balance on the card, find one with a low interest rate. If you will pay your bill in full each month, then you can focus on a card that offers other perks.
- Do you expect to be traveling much for a new job?
If so, consider a card that gives cash back on gas and hotel stays. Cards that issue points instead of cash back aren’t as beneficial to your wallet.
- Will you be furnishing a new apartment or home?
Some credit cards offer cash-back bonuses when making purchases for big-ticket items like furniture.
- Do you have existing debt you want to pay off using a credit card?
While this isn’t always a wise move, this method can be helpful if you do it right. First, look for a card that has the longest introductory zero interest rate possible. Then calculate how much you will have to pay each month for your debt to reach zero before the intro rate expires.
Also, don’t run up new charges on the card.
Here are some recommended cards:
The Citi Simplicity Card currently has zero percent APR for 18 months on purchases and transfers. It also charges no annual fee.
The Chase Freedom Visa offers 5 percent cash back on gas purchases, restaurants and other locations on a three-month rotating basis. It also has zero percent APR for 15 months.
The BankAmericard Cash Rewards card offers 1 percent cash back on all purchases made with the card. In addition, you’ll get 2 percent back on groceries and 3 percent back on gas, up to $1,500 each quarter.
The best card for paying off debt with a zero percent interest rate is also the Citi Simplicity Card listed above. It charges a smaller than average transfer fee, but you have 18 months to pay down the balance before the rate increases.
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