College Credit Card 101
Having a good credit score is important in today’s credit-oriented world, and the sooner you can start building a great credit score, the better. Many credit card companies will market specific student cards with low limits to help students build credit.
Working on building a good credit score will help you immensely when you graduate, like when you’re searching for an apartment, getting a car loan, applying for a mortgage, or even finding a job. Some employers will check your credit score during the hiring process and use it in their decision making.
What Is Credit Anyway?
Using credit means you’re borrowing money from an issuer, whether it’s a bank, credit union, or other financial institution, and promising to repay it in a timely manner. Loans typically have a set payment amount each month, but credit card payments will depend on your credit limit and how much of that limit you’ve spent. Your credit limit will determine how much you have available to spend each month.
If you don’t make each payment in full, the remaining sum will move to next month’s bill with interest added on. If you continue failing to pay the balance in full, interest will keep adding up.
Finding The Perfect Card
The hard part about finding a credit card without already established credit is finding a credit issuer to extend credit.
Look for credit cards that are specifically offered for college students. They’ll often have cash-back rewards and help you build your credit in a safe way. Many will also offer it to you even if you don’t already have credit.
Try to establish a ‘credit card code’ for yourself so you don’t get carried away with purchases. For example, only use it for your grocery purchases and music subscription service, that way you have an estimate of how much you’ll be spending each month.
It’s also a good idea to set a monetary limit for yourself so you don’t overspend and can pay the balance off every month. Many credit card companies offer text alerts or push notifications to tell you when you’ve reached a certain dollar amount. If you pay your balance in full, you can enjoy the benefits without the interest charges.