7 Things Students Need To Know About Credit Cards

by Broke Grad on April 10, 2008

This is a guest post from Tisha Kulak. Tisha Kulak is a writer for Creditorweb.com, where she writes about credit card offers, student credit cards and responsible credit card use.

Targeting teen and young adults, credit card offers start pouring in often before college and all too often before kids are even aware of how a credit card works. This can lead to a long future of financial struggle and a history of bad credit. There are several things every young adult need to learn before accepting responsibility for a credit card, even as an authorized user on a parent’s credit card.

  1. Items Purchased on Credit Are Not Free – It may seem all too easy to walk into the convenience store, load up on hot dogs, soda, and some other late-night snacks and simply charge it to your credit card. However, that late-night junk food run will cost you big time in the future, especially if you are late or miss a payment entirely. If you can not pay for the items you want in cash, it means you can not afford it.
  2. Credit Cards Should Be For Emergencies – Many college students and their parents opt to have a credit card account to use in emergency situations. Students often need books or other materials related to education. It is more responsible to utilize a card under those circumstances or other emergencies (ie: flat tire, emergency plane ticket) than it is to finance your spring break trip or off-campus concert on credit. Just because you have a card does not mean you have to use it.
  3. Credit Cards Are Not All The Same – There are many credit cards on the market today and each one of them is a little bit different. Varying interest rates, repayment options, and fees could make a big difference. Signing up for just any card could cost you more than you anticipate. Make a well-informed decision by comparing several cards and understand what the fine print really means. Don’t open an account with anyone just because you got a cool t-shirt or free music downloads.
  4. Cards Designed for Students – When doing your research about the various credit cards available, do not overlook the cards designed with college students in mind. Many offer advantageous benefits and rewards programs to those who fit into a college demographic. Make practical decisions based on your spending habits and what rewards would best benefit your situation.
  5. You’ll Now Have A Credit Report – As soon as you open a credit card account, you will establish a credit report. The credit bureaus will update and add any account information to your credit report consistently but the information may not always be correct. Take the time to review your credit reports, know how it works, and what information it contains. Check it for accuracy at least once a year. A lot of weight is placed on your credit report and it will reveal how many accounts you have open and if you are making regular payments on time.
  6. Account Numbers Must Be Secured – Identity theft is so prevalent these days and it can be all too easy for a stranger to have access to your credit cards. College campuses are notoriously busy, active places, full of people you may not know very well. This also includes the internet world. Unless you keep your account numbers and card information top secret, you will risk getting taken for a ride. As soon as you discover your card has been stolen, lost, or used fraudulently, report it to the credit card company immediately.
  7. Credit Card Use Now Impacts Your Future – After college, if you anticipate buying a house, furthering your education, or getting a car, you best have an excellent credit report. You need to pay your bills on time, every month. It is also becoming more common for employers and landlords to do a credit check before getting a job or an apartment. Mismanaging your financial situation as a young adult can be detrimental to your future.

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{ 10 comments… read them below or add one }

1 Emily @ Taking Charge April 10, 2008 at 8:37 am

I think most of this is great advice — I just have one issue with the fourth point. If you have no credit, you may be much more likely to be approved for a student credit card than a regular credit card. That is the one big advantage. However, student credit cards on the whole are not a great deal. Many have no reward programs, and the APRs on student cards are generally higher than any other type of credit card. This is because students are very high-risk investments to credit card companies — they usually have no to little income and are new at credit. So if you plan to carry a balance, you will be paying often significantly higher interest charges with a student card. If you are only accepted for a student card, use it for six months, build up some good credit, then apply for a regular low-interest card.

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