5 Awesome Credit Card Tips For Students
Credit cards can be both a blessing and a curse, and this is especially true for cash-strapped college students. With tuition payments and required textbooks looming, now is a perfect time to snag some credit card tips.
1) Get a credit card
For many college students, it might seem like a good idea to wait until graduation and full-time employment to get a credit card; this unfortunately isn’t the best idea. A major aspect of your credit rating is tied to the length of your credit history, which means that it’s time to get a credit card if you don’t already have one. This will increase the likelihood that you will be approved for an auto loan or mortgage when the time comes. If you don’t yet have a credit history, getting a credit card can be tough. My first credit card was a Chase student Visa that featured a 20% interest rate and an awesome $500 credit limit. Without a credit history, the credit card companies are more or less rolling the dice on your ability to pay them back, so don’t expect to qualify for anything too great right off the bat. You might even have to get a family member or friend to co-sign on your card, which increases the importance of tip #2.
2) Always pay your bill on-time, and in full if possible
The best way to boost your credit score, qualify for a higher credit limit, and decrease interest rates, is to pay your bill on time. This is pretty standard advice, but it’s quite important. Essentially, the more responsible your behavior, the more you will be rewarded in the future. The potential future benefits aside, late fees and interest really suck, which should be reason enough to encourage you to pay your bills on time.
3) Take advantage of rewards
If you happen to get a rewards card, you can earn points on every purchase that you make. I essentially make every purchase on my credit card, because I can easily pay it off and keep the reward points. A pretty standard reward percentage is 1%, with additional bonus points available in specific categories of purchases. Over the last year or so, I’ve traded in my rewards points for a few hundred dollars worth of Amazon gift cards, which I then used to purchase items like an external hard drive, for essentially nothing.
4) Know about other benefits
There are several lesser-known benefits of making purchases with a credit card, including extended warranties and buyer protection. When my wife needed a new Macbook Pro earlier this year, we realized that buying it with our Visa card meant that the warranty would be automatically doubled! Instead of having to shell out extra dough for an extended warranty, her laptop is now covered through its second year by Visa.
Buyer protection is equally awesome. If ever you are overcharged for something, you can easily dispute the charge and have the incorrect charge removed. Some cards even offer a 90 day price guarantee, which means that if something you buy goes on sale right after your buy it, the credit card company will refund you the amount extra that you paid. None of these benefits are possible with a check or cash.
5) Control yourself
The scary thing about credit cards is that they can easily lead to losing control of spending habits. Credit cards are a source of financial power, and it’s of the upmost importance that credit card users distinguish between luxuries and necessities. If you have a hard time running up your credit card bill or buying things that you don’t need, it might be a good idea to put your card in a drawer for a while. Do not, however, cancel the credit card; it’s better for your credit score to have an unused credit card then to cancel it and reduce your credit history.
Do you have any tips in regards to students and credit cards? Leave them in the comments!