CardRates.com Guide: Student Cards
Student credit cards are a great way to build your credit history and learn about managing debt. The earlier you begin, the better off you’ll be down the road. But if you’re new to using credit or made some credit mistakes in the past, we’ve got five tips for using a student credit card you should know.
1. Read the terms carefully
Understanding the fees, interest charges and penalties that come with your student credit card may not be easy, but it’s essential for you to try to understand. Some student cards charge an annual fee, even if you never use it. This can end up being expensive and it isn’t necessary. Others charge you very high interest, which can cost you hundreds more in charges every year. Compare the terms and choose the best card for your needs.
2. Understand the language
The terms and acronyms credit card issuers use might seem like a different language. Knowing what they mean will help you stay ahead of the game and out of debt. Learn what the APR is for your student credit card and how much it will cost to carry a balance. You should also know whether you have a variable rate, what fees you’ll be charged and the length of the carrier’s grace period.
3. Don’t overdo it
Just like staying up and partying all night can lead to regrets the next day, using your card in excess can cause a financial hangover. Don’t overspend on your student credit card – you’ll need to pay every penny back eventually. Before using your card to make a purchase, ask two questions: Can you pay cash for this instead, and do you really need the item? Staying ahead of debt is the best way to avoid too much of it.
4. Avoid cash advances
It may be tempting to pull cash from your student credit card when things are tight, but don’t do it. Cash advances cost you the maximum interest rates and they typically charge a high transfer fee. This is a really expensive way to get a loan. Exhaust all other options before resorting to a cash advance.
5. Take your debts seriously
Get into the habit of treating debt like a valuable tool, but one to use sparingly. Respect the power of credit and the responsibility that goes along with it. Building a good credit history is a matter of using debt but not overdoing it. Establish good habits now and you’ll have a much easier time in the future.
A student credit card is a great way to learn solid credit management while building toward a good credit score. If you’re responsible with your credit today, you’ll reap the benefits in the future.
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Editorial Note: Opinions expressed here are author's alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.