A Student’s Guide to Being a Savvy Credit Card User
Credit cards are a great way for students to build up just enough credit to give them an edge with their post-graduate financing needs. However, caution and discrepancy need to be used at all times, as a simple mistake could easily put you in debt or leave a blemish on your credit. Read on to learn more:
Identify Your Needs
“There’s no free lunch,” the old saying goes, and that certainly holds true with student credit cards. Credit card funds are not prepaid cash; they are loans that must be paid back on time. Student credit cards are much better used for smaller purchases, like food, toiletries, or textbooks. This makes it less likely that you will exceed your credit limit, or spend too much and struggle to pay it back.
Pay on Time and in Full
Every purchase you make on your credit card and pay back on time goes towards keeping up your credit score, which is essential to securing loans for automobiles, graduate school, and houses. If you fail to pay your bills on time, not only will a mark go on your credit score, but you will also need to pay interest as a penalty. Penalty interest can add up quicker than you might think: if you receive a credit card bill of $200 and only have $150 to put towards it, many companies will charge you interest on the $200–not the $50 shortfall.
Avoid Opening Multiple Cards
While getting your first credit card may be exciting, resist the urge to get another. Lenders sometimes get nervous when they see a student with limited income take out too many credit lines, as this can easily result in a huge amount of debt. As such, your second card may come with stiffer penalties such as higher interest rates.
At GCS Credit Union of O’Fallon, we offer a number of credit cards designed with students in mind . Our credit lines can easily be adjusted to keep your spending in check, while still helping you build a sparkling credit score. Call us today at (618) 797-7993 for more information.