How to use your credit cards effectively and wisely
One of the most important financial issues to deal with in college is how to handle credit cards.
Learning how to properly use credit cards makes for good insight and practice on how to handle more complex financial concepts, such as mortgages and car loans, later on in life. However, should credit cards be handled carelessly, debt can quickly accumulate that could easily follow you into your 30s.
The best idea for a college student looking for a credit card is to get a student credit card. They’re specifically designed for those with very little credit and income.
The rates are usually reasonable and the limits are low to begin with, most likely just a few hundred dollars. This can help to keep spending in check. For a comprehensive list of student cards, go to the Student Credit Cards Web site.
Most stores that you shop at today will offer you a store credit card and discount when you’re checking out, if not also several times before. Beware of store cards because although you may save a few dollars now, as you could be in a precarious situation later.
This is because store credit cards have notoriously high interest rates. Many will be around 25 percent or higher. If you make payments on the card instead of paying it off completely each month, interest will accumulate much quicker than with a regular Visa or Mastercard, which could make it extremely difficult for you to keep up with the payments.
Additionally, when getting a credit card, beware of any card with an annual fee. They are usually only worth paying if you’re more established and put enough each month on the card to receive substantial miles or points in return.
There are many credit cards that don’t charge an annual fee and will give you some amount of cash back or points. Many cash back options can even have added bonuses such as doubling if you use it toward a purchase at certain retailers.
The responsible way to use credit cards is to consistently keep track of the charges. All credit cards have online access and frequently checking the balance can keep the total from running too high. Also, using a credit card for one specific purpose such as only for gas or groceries is a smart way to build credit and manage finances. Being an adult requires time and effort to ensure that responsible financial decisions are being made. Choose wisely.
Credit cards can be helpful tools for building credit and managing finances as long as they are not used recklessly. Good habits start young and the earlier people begin acting financially responsible, the better they’ll be off later in life.
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