Are you ready to start a credit history? Most likely, your student credit card will be your first step into this kind of adventure. But here are five things you need to know before you sign that application form:
- You go to them. Don't worry if you still don't have a student credit card. Credit card companies will come to you and find you if you are currently signed up. Many of them even go to schools and actively try to sell credit cards to students while they are still on campus. If you sign up, they will even give you some free stuff like coffee mugs, stickers, T-shirts, pens, and the like.
Even if there isn't one at your school, you could go online, look for the best interest rates, and then call the bank of your choice. You can also use their offer by filling out an application online.
- You should only get a student credit card if you can pay for it. Sure, a student credit card is more convenient than cash because it is safe, you can get money at any time, and if you lose it, you can get a new one. But you still need to know if you have enough money to pay off your balances every month, either in full or with the minimum payment.
Student credit cards are known for giving their owners a false sense of independence that can get them into trouble if they aren't careful. Small purchases can add up over the course of a month, making it hard to even make the minimum payment. You will also need to watch out for things like carrying or finance charges, annual fees, and cash advance fees. If you add these to your regular purchases, you could end up with a bill that is pretty high.
Fixed rates don't last forever. You got lucky if your student credit card came with a low fixed interest rate. But your good interest rate might not stay that way forever. Credit card companies can change your interest rates whenever they want, as long as they tell you at least 15 days in advance. You can't do much about it. Just remember that it could or could not happen. When you sign up, be sure to read the agreement so you know what to expect in the future.
- Your bill isn't always reliable. Are you surprised to find a bill for a pair of expensive flip-flops you never bought? There are other people like you. People often find things on their credit card bills that they haven't paid for, so it's important to check your billing statement as soon as you get it.
If there are entries that don't make sense or are wrong, you should call your credit card company to dispute it. If there are fees or charges that you don't understand, it won't hurt to ask questions. After all, you're the customer, and the credit card company is doing something for you. You can ask questions about anything on your credit card bill that seems strange.
- If you aren't careful, you can mess up your credit history. Bad credit is worse than a ghost who wants to get even. If you don't deal with it well, it can keep coming back to you for a long time. When you're still in school, owing a few thousand dollars may not seem like much, but it can quickly grow into a huge amount that you may have trouble paying back. When it gets to that point, you might hurt your chances of getting other loans and mortgages when you're done with college.
You might want to think about getting a student credit card if you don't already have one. And if you do, ask yourself if you can afford it. If you can, be self-disciplined enough to use it well if you can. A student credit card that you use wisely is your first step toward building a good credit history that you can be proud of in the future.
