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What every college student needs to know about credit cards

Going away to college and being on your own for the first time can be a lot of fun when you have a credit card.

And that’s the problem.

It’s not fun getting into credit card debt as a student. Having your own card is much different than having a copy of your parents card. There is zero fear of interest or late payment fees (we’ll go over all of this and more shortly) when it’s not “your” money. Once it’s your own card you’ll find that those late night fast food runs and online shopping purchases feel a little less necessary when you’re responsible for paying it off.

This is why it’s important to know what you’re getting into and knowing which card and what benefits to look out for – so you’re wisely building credit instead of substantial debt.

Here is everything you need to know about managing your own credit card for the first time.

1. Not every bank will let you open a card – Click here for the list of 5 of the best credit cards for college students

2. It is not free money – A credit card is a great way to build credit history early but that doesn’t mean you can afford everything. Determine your needs vs. your wants.

3. Pay it off on time and in full or you will be charged high late fees and interest charges

4. Don’t just pay your “minimum payment due” – First-time credit card holders make the mistake of only paying their minimum balance and think they’re okay. You HAVE TO pay off your “Statement Balance”

5. Learn how to read your credit card statement here – https://www.nerdwallet.com/blog/credit-cards/read-credit-card-statement/

6. Pick one with a low APR APR stands for Annual Percentage Rate or how much it will cost you to “borrow” money. Basically, this is how you can track how much interest you pay if you don’t pay in full and on time.

7. Pick one with 0% Intro APR – Some cards offer you up to 0% APR from anywhere to 6 to 18 months. Meaning you have a specific length of time to pay off the credit card balance before collecting interest and offer ends.

8. Pick one with a rewards program – Do you know how you earn points for a free drink from your Starbucks Rewards program? Many credit cards have something similar on all or specific purchases – go to the next one for more on this.

9. Choose rewards that matter to you – Want to earn Cash back, airline miles, hotels, gas – There are credit cards for all of them. Some offer a percentage of back on gas or grocery purchases which is great for college students – read more on this here.

10. Pick one with no annual fee – Before you pick the card with the best rewards, make sure you don’t have to pay an annual fee just to be a cardholder. Some will charge you up to $100 or more for having the card.

11. Read the fine print – Become clear with penalties and fees for paying late, length of terms with 0% intro APR, default interest rates – Banks can decide to spike interest rates when they want.

12. Don’t buy the stuff you can’t afford – Here’s a good rule to follow; If you can’t pay for something in cash, don’t charge it to your card. 

13. Know your credit limit – When you open your credit card, you will get a maximum amount you can charge. This is your credit limit. For example, it could be $2,000 or maybe $6,000. 

14. Know your own limits – If you have a higher credit limit, don’t think you have to reach it. High credit scores are correlated with people use 10% or less of their available credit.  

15. Build your credit – As you get older and look to make larger purchases like a home, car or take out a loan to start a business, your credit score will matter how much money you can borrow.

16. Keep track of your credit score – Get used to hearing, “what’s your credit score?” An average to excellent credit score is anywhere from 630 to 850. Things like paying bills on time and not exceeding your credit limit, maintain a good score – learn how to improve your credit score here. 

17. Get a card where you can check your credit score – A lot of cards allow you to see your up-to-date credit score online. 

18. Don’t sign up for multiple cards – This is a common trap college students fall into. They get used to charging for everything and they look to open more cards to earn more available credit to spend. Stick to one and learn how to manage it correctly.

19. Avoid cash advances – Getting cash in your hand courtesy of your credit card sounds awesome but it’s not. The interest rate on a cash advance is typically higher than the rate for purchases. This is another quick way to collect high interest and get into credit card debt.

20. Don’t subscribe to everything – There are plenty of businesses who want you to subscribe annually or monthly to their product, this is an easy way to add charges to your credit and not even realize it.

21. Call the number on the back of your card – If you have any questions about your account, there is a 24/7 customer service number on the back of the card to call. TIP – Save the number in your phone

22. Sign up for text /email alerts – Chances are you’re not going to pay much attention to paper statements in college. Get all your alerts, due dates, statements sent to your email and text.

23. Note in your calendar(s) the due dates Pay early to take into account the # of processing days, weekends and bank holidays and your own school breaks.

24. Sign up for auto-pay – One incredibly easy way to avoid late fees is to sign up for auto-pay where you choose the date and pay in full (make sure you have $$ in your checking account). 

25. Pay via mobile – Download the app for the bank you use and sign up for notifications to track purchases and make payments on the go.

26. Ask for a higher credit line – Look, emergencies happen where you may have to spend more than your available credit (please look to avoid this), but you can ask your issuer for a credit line increase. Note that you won’t always qualify but it never hurts to ask

27. You don’t need a credit card – Seriously, if you can pay most things with cash or your debit card, do that. Even though a credit card is a powerful tool to build credit, it’s an easy way to spend money you don’t have. 

Don’t be an idiot with your credit card – If you do open a credit card, follow the tips above and you’ll be able to handle one credit card and pay off all purchases with no problems (or very little). The last thing you and even your parents want to see is how much credit card debt you have. Okay, I think you’re ready for your first credit card – Remember, a credit card is not free money – Spend wisely!

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