There are many reasons that college students and their parents find credit cards a tempting financial tool, including their convenience, their ease of use and their utility when cash is short or in an emergency. At the same time, credit cards, if they aren’t used responsibly, can have a long-term negative effect on a college student’s future. Therefore, if you are a college student, educate yourself well about credit cards before you get one. Here are 6 credit card facts for students.
Credit Cards Are Expensive. From annual fees to double-digit interest rates to late charges and other fees, the cost of a credit card can add up fast, especially if you don’t pay the bill in full each month. Before you get a card, be sure you understand all the costs associated with it and how they work. For example, while interest won’t be charged on purchases you make during a billing cycle if you pay the bill in full by the date it is due, if you don’t, interest may begin to accrue on purchases from the day you make them. As a result, interest can begin to pile up quickly if you carry a balance. Therefore, try to live by the rule that if you can’t pay for an item at the end of the month, don’t charge it.
Credit Cards Affect Your Credit Score. As a college student, probably the last thing on your mind is your credit score. You may even be surprised to learn that you have one. In fact, the minute you get credit (and that includes getting a credit card) you start building a credit history and developing a credit score. That is not necessarily a bad thing, but it is important to know what goes into a credit score and how it can affect your future. When it comes to credit cards, a number of factors can affect your credit score, including your credit line, how much of that credit line you use (the less, the better when it comes to credit scores), and whether you pay your bill on time (late payments can hit your credit score hard).
A Bad Credit Score Can Hurt You in More Ways Than You Think. Believe it or not, a bad credit score can affect your ability to get a job, rent an apartment, buy a car or get insurance, among other things. As a result, the cost of credit card purchases you make at the mall can be steeper than you realize if you forget to pay your credit card bill or carry an excessive balance on your account.
Rewards Don’t Always Pay Off. Rewards credit cards, used responsibly (defined as paying the balance on time and in full each month), actually can pay off for some consumers. However, the temptation to use the card to get the rewards can be great, and, if, as a result, you run up a bill you can’t pay in full, interest costs are likely to more than offset any rewards you earn.
Reviewing Your Monthly Bill Is a Necessity. Keep track of your charges, including saving receipts, so that you can compare them to your bill at the end of the month. Be sure that there is nothing on your bill that shouldn’t be there and, if there is, let the credit card company know immediately.
Safeguarding Your Credit Card Is Your Responsibility. Keep your credit card secure, don’t lend it to friends, and safeguard your credit card number.
www.brokegradstudent.com, 7 Things Students Need to Know about Credit Cards – Broke Grad Student
Mike Dolen, www.overturemarketplace.com, 3 Student Credit Card Traps You Need to Know
life.familyeducation.com, Credit Card Savvy: Plastic Tips for Students – FamilyEducation.com
More from this Contributor:
http://finance.yahoo.com/news/First-Person-What-Know-About-ac-917628186.html?x=0, What to Know about Secured Credit Cards
http://www.associatedcontent.com/article/5855256/13_tips_to_help_you_graduate_from_college.html?cat=3, 13 Tips to Help You Graduate from College Debt Free
http://www.associatedcontent.com/article/5959578/how_to_cut_college_costs_with_dual.html?cat=3, How to Cut College Costs with Dual Enrollment
http://finance.yahoo.com/news/First-Person-Making-Sense-ac-2821926901.html?x=0, First Person: Making Sense of Student Loans