Student credit card is the perfect way to start building your credit history. Once you are in college or about to become a student, the time is right to get your credit card. Here are few notes of simple do and do not.
My student credit card story
I was dirt poor and got my student credit card from Chase Manhattan. I picked Master Card over Visa. My credit limit was $500 and first year annual fee was waived. It was about 13 years ago and those were three simple rules I followed:
- I only charged what I knew I could pay off in card grace period - 25 days or so
- I always treated my card as cash - if I didn't have enough cash, I didn't buy it
- I worked nights and weekends to pay my tuitions, just over $6,000 for semester
So basically, I used my student credit card solely to establish credit. I didn't carry balance, I didn't buy the latest gismos. I drank cheap beer. Since I was a good chap, Chase waived annual fee for good. Worked magically for me. Once I graduated and was no longer a student, I had zero debt, my old credit card with a new balance of $2,700 and a credit score of 720. I bought my first brand new car, a blue Mustang, and few months later a nice condo in suburbs. That little student credit card took me a long way up.
Tips to Avoid Credit Card Debt on Campus
- Ignore the hype student credit card promoters create like "low, low rates, no payments for three months, start building your credit now" - you need just one no annual fee credit card. You will be full time, mostly unemployed or underemployed student for the next four or so years, remember that.
- Don't take free stuff bait, banks throw at you - free water bottles, t-shirts, lawn chairs, organizers.
- Remember that debt piles up very quickly and eventually you must pay. Of course you can refuse and ruin your credit history from the start.
Signs that you are abusing your student credit card
- Always pay bills late and can make only minimum payments
- Exceed the credit card limit several times a year
- Must work overtime to pay card charges - smart thing to do when you have finals, right ?
- Need new student credit card to pay off another - that is a very bad sign
More and more students and graduates accumulate so much debt it is just crippling. You don't want to spend good portion of your first job paycheck to pay for your college stupidity.
It is worth to take a notice that New York recently passed a measure that would prohibit the onslaught of student credit card offers on campuses and requires some basic consumer education.
Nine other states - Arkansas, California, Hawaii, Illinois, Louisiana, Missouri, New Mexico, Virginia, and West Virginia - have passed restrictions to protect students of credit card solicitation on campuses this year, according to the National Conference of State Legislatures. Seven other states have pending proposals.
It is obvious that while you as a student are an adult, having credit card is a big responsibility and few students have any basic knowledge how to manage their finances. Student credit card is powerful weapon that is easily obtained and can help you tremendously, but if misfired can hurt you in a lot of ways.
More on Student Credit Cards:
Secured credit card
