If you are a new college student and you’re considering the idea of getting a college student credit card, or if you’re simply the parent of a brand new college freshman, there are several “do’s and dont’s” that you should keep in mind in order to avoid financial trouble.
Another “do” is to make your payments on time and to pay more than the minimum monthly payment. Ideally, you should be paying the balance off in full each month. If this is not possible, at least make sure to send more than what you are required to send. If you have racked up so much debt that you can’t afford to pay the more than the minimum monthly payment, you have already put yourself in a bad financial situation.
Remember, having a credit card as a college student should be looked at as a tool toward building your future. If you pay the card on time each month, you will be going a long way toward establishing a solid credit history. If you pay more than the minimum balance – or pay it off each month – you will also give your credit rating a boost while keeping yourself out of financial trouble.
On that note, a major “don’t” is that you don’t want to pay your tuition with your credit card. According to research, about 25% of college students use their credit cards to pay at least a portion of their college tuition. This is a big mistake since credit cards have higher interest rates than educational loans. In addition, the terms of education loans are far better than those you will receive with a credit card. If you need more cash for tuition, look toward loans rather than toward your credit card.
You also need to avoid taking out cash advances with your student credit card. Taking out cash advances with a credit card is almost always a bad idea. First of all, you will have to pay a high fee just for the convenience of taking out a cash advance. Second, the interest rates on cash advances are generally much higher than the interest rates for normal transactions.
By following these simple tips, you can make your credit card work for you rather than against you. In addition, you will have laid a solid groundwork for your financial future that you can certainly benefit from down the road.
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