It’s that time of year when college students are packing up and heading back for a year’s study. First-year students are given many different warnings from their parents and well-meaning friends. They are told to focus on their studies and not get carried away with various extra-curricular activities. Most of the time, the experience offers sound advice, but there might be some reasons for college students to take advantage of the reliable credit card offers purposefully. While there are dangers for anyone who mishandles credit cards, college students may find some pretty impressive benefits for those who use credit cards appropriately.
When handled appropriately, credit cards can be beneficial for college students. There are three basic but major benefits of obtaining and using a credit card during your college years.
Student loans may help establish some credit and have a positive impact on your credit score. However, this will not do you any good until after graduating from school and paying them back. FICO has some interesting criteria for determining your credit score, and one of those is the diversity of credit sources and the responsible use of credit cards. One way to improve your credit score is consistently making payments on time. Credit cards can also help students who do not obtain school loans prove they are responsible financially. It establishes a good credit history, helping them obtain their own house or apartment later on.
Parents can sit down with students to go over monthly statements to assist them in monitoring their spending. As time goes on and the student becomes more responsible and comfortable, parents can back off and allow students to manage more of their finances. There are three things students are going to learn about financial concepts.
Very few students buy textbooks at the campus store these days. Most of them are purchased online. Making online purchases with a debit card can make you financially vulnerable. There are more protective measures on credit cards than on bank accounts, and most credit card companies do not hold cardholders liable if any fraudulent charges are made on the card. Using a credit card is much safer for most purchases, and users do not put their bank account in danger.
Even though we have established that learning how to manage a credit card can benefit college students, some common pitfalls need to be avoided. For students who are not conscientious in handling credit cards, some serious problems can occur.
It can be difficult to forget that you are actually going into debt when you use a credit card. It’s simple to swipe the card and head to the next store. However, even the smallest purchases can soon add up to a large amount of debt, and you spend lots more than you had planned. Going over the limit set on a card can be expensive, and having the card maxed out will do you no good.
It can be handy to use a credit card that offers rewards in exchange. Rewards may include cashback, merchandise, or travel. Even though this is really beneficial, unnecessary spending can cost you a lot more than the rewards you get in return.
When you allow your credit card balance to go over into the next month, you’ll be charged interest and required to make a minimum payment. The credit card company determines this and the terms you agreed to when you signed up. If you only make the minimum payment, you’ll accrue interest, which will cost you a lot more over time.
You usually have the option of receiving cash back when purchasing a store. The interest rates on these types of transactions are usually astronomical. It can be easy to get the cash in hand without realizing how much it costs you in the long run.
There are several things you can do to ensure you have the best credit card experience possible. You want to reap the benefits of having one and not fall into one of the pitfalls so many have found themselves in. Here are some tips to observe:
When they are used responsibly, credit cards can be a valuable tool for a college student. However, all credit cards are not created equal, and sadly, some companies design cards to take advantage of college students. After looking through numerous options, we narrowed it down to three of the best credit cards for college students. Here are our top 3 choices: