Did you know that the average college student in the United States has four credit cards? According to a recent Sallie Mae study, that seems to be the case. What’s more, while most students have a combined balance of 3,000 dollars, some students out there have more than 7,000 dollars in debt.
As we all know, most students have no chance of paying off their debt before they graduate. Finishing college with that much debt can easily come in between you and your goals – especially if you missed any payments along the way.
The Importance of Good Credit
Ok, you already know that your credit card usage is collected into a single report that’s graded with a unique credit score. Everyone from landlords to employers will use this score to determine whether to accept your application or not.
Holding too much debt on your report will decrease your credit score significantly. And a low credit score will keep you from getting a car loan, buying an apartment, or even landing a job. What’s worse, some utility services require a large safety deposit prior to turning on their services, Using a card is simple enough, however, there are some things, like credit card processing fees that you have to think about if you want to keep a good credit score. In order to help you keep your credit history in order, here are five credit card tips for students.
Five Credit Card Tips for College Students
1. Stick to only one card
Although some students are lured to apply for almost every card they see – that’s not a good idea. Instead, you should keep your credit cards at a minimum during this part of your life, because every card application actually causes a certain drop in your score.
2. Only buy what you can actually afford
Did you know that using your card when you can’t afford to buy something is the fastest way to build a balance you can’t won’t be able to repay for decades? Look at it like this: by spending your money recklessly means you may pay more than a 100 dollars for a 30-dollar item.
3. Make sure your balance is paid off
As soon as you form a habit of paying off the credit card balance immediately when you get the bill, you’ll be able to avoid debt. Moreover, you’ll only end up paying for what you actually bought, not the additional fees credit companies usually charge when you don’t pay in full.
4. Never take cash in advance
Cash in advance may seem attractive, however, you need to know that you’ll pay 4% fees – in addition to finance charges – on these advances. As a matter of fact, cash advances usually have a significantly higher interest rate than most purchases.
5. Stay under the credit limit
Once you go over your limit, you’ll encounter huge fees. Furthermore, these fees are extremely hard to get rid of. You see, you can possibly think that you’re paying the balance under the limit, when in actuality, the fees push it over the credit limit.
The Bottom Line on Good Credit
The matter of the fact is, most credit companies won’t tell you how to use your credit card properly. As a matter of fact, most of them hope that you’ll make a few mistakes so they can charge you more fees and interest.
That’s why it’s important to follow the tips we outlined above. By staying debt-free and keeping a good credit history, you’ll ensure that your future stays bright.
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