Student Credit Cards Taking the Plunge

You’re off and running, in college, getting ready to enter into the wonderful world of adulthood, where the financially responsible reign supreme, and having a clean credit rating is necessary.

And then it hits you: You don’t have good credit, because you don’t have any credit! Feel those beads of sweat starting to form? Don’t worry; it’s not the end of the world. We’ve all been there.

One of the fastest ways to start building credit is a credit card. And as a student, you’re probably being bombarded with offers from companies eager to sign you up.

For many students, the decision to get a credit card is an easy one; who wouldn’t want instant access to some extra cash? You can shop till you drop or party all night with your friends, all of that entertainment being funded with one swipe of the magical plastic.

But as a young adult preparing to begin a life of mortgages, car loans, personal lines of credit, and more bills than you can shake a stick at, this is also your first opportunity to really learn the importance of responsible financial management, and how to be careful with your credit. Before you take the plunge, take these three steps into account.

Step One: Do your research.

Don’t just fill out the first application that shows up in your mailbox. If you’re serious about getting a credit card, take the time to look at your options. Ask questions about interest rates, rewards programs, annual fees, and anything else that you can think of. A bit of careful research will make sure you get the card that’s right for you, and keep you from paying the insane 20% interest that most companies try and trap you with.

Step Two: Control your limits

It’s your card, and you should decide what your limits are. Most companies won’t offer you tens of thousands of dollars, and you likely don’t want that much anyways. Remember: The more you can spend, the more potential trouble you can get into. Start yourself with a lower balance, like $500 to $1,000. That will ensure that you don’t spend more than you can afford to pay off, and give you a good idea about how the monthly payments will fit into your measly student budget.

Step Three: Monitor your spending, and watch your statements.

It might be tempting to whip that shiny new card out at every opportunity. You have a credit card and you’re not afraid to use it. But it’s easy to spend a lot without realizing it, especially when you’re in the grips of a shopping frenzy. Try to keep it on hand for emergencies only-and clearly define “emergencies”, so you don’t find yourself buying ten pairs of emergency shoes, or a dozen emergency beers for your buddies.

Be sure to take a careful read over your monthly statement. Every month. It’s a good way for you to catch fraudulent charges. It’s also a monthly reminder of how much you spent, and how much interest you’re paying. This gives you a great view of overall spending habits, and lets you get a feel for how that interest rate translates into actual dollars. You might find that you’re ordering way too many late night pizzas. Or maybe not enough!

Remember: Credit cards are nothing to be scared of. If used responsibly, they’re a really excellent tools for everything from emergencies to earning reward points. And for the student, there’s no faster way to start building credit and getting yourself established as a financial mastermind!