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College is full of lessons to be learned and one important lesson you should learn is how to manage your money wisely. You will not receive a grade on how well you manage your first credit card. It’s important to learn credit card responsibility to avoid unnecessary debt. To help you be successful in owning your first credit card, here are some tips to keep in mind.
Benefits of Having Credit Cards
Builds Credit
Credit cards are the best way to start establishing a credit history. To build your credit score, you need credit; therefore, getting a credit card while still in college is a simple way of doing this. The fact is that a major contributor to your FICO score is your credit history length. Obtaining a credit card while still in college helps you begin building your credit history so that when it comes time for you to require credit to obtain an auto loan or your first mortgage, you should not have a problem obtaining a loan.
Alternative to Carrying Cash
These days, not many people carry cash and college students, in particular, are not likely to deal with paper currency. If you do need cash, however, and don't have an ATM near you on campus, reaching for your credit card can help you if you are in a bind.
Tips for Credit Card Ownership
While there are many advantages to having one or more credit cards, you should also be aware of their potential drawbacks.
Don't Forget to Track Spending
You’ll want to make sure you are keeping track of your spending so you can easily stick to your monthly budget. Spending more than you were anticipating on your credit card could make paying it off in full each month impossible, which would add interest on top of your standard purchases.
Set a Reminder for When Your Bill is Due
No doubt you are very busy in college going to class, juggling homework, and keeping a part-time job. With so much going on, it does not take much to forget little details like paying your credit card bill. However, when you don’t pay your bill on time, it can impact your credit score. As you begin your new post-graduation adult life, this will make it difficult to get a car or home loan and to get a great rate on that loan.
Stick to One Card
Too often, college students sign up for multiple credit card offers. Having too many cards can make tracking expenses and bill due dates difficult. Picking one card that has rewards tied to it may be a better option.
Using Credit Cards Wisely
To keep yourself out of credit card debt and keep your credit score in check, you’ll want to pay your bills in full and on time every month. You shouldn’t use a credit card any differently than you would your debit card, except for how you pay it at the end of each month. With a debit card, your money automatically gets pulled from your bank account at the time of your purchase, but with credit cards, it's up to you to pay the balance.
The bottom line is this. You can establish credit responsibility and you should. This will set you up with a strong credit history so you can continue down your path as an adult with sound financial habits.
