College students are exposed to many new experiences, including the wonderful adult world of financial responsibility. As a student, you will likely need extra money to help pay for some of your expenses. You may even be in the market for a new car or a better apartment as you get older – but unless you have a lot of money saved you’re going to need a good credit history and adequate income to qualify for student credit cards.
Opening a credit card is the first step in building your credit history, and there are many options available while you’re in college. Student credit cards not only help you out in the short-term with extra money, but they also have the potential to open more financial opportunities in the future. Before you apply for every card out there, it is important you understand all the benefits and potential consequences of opening your first account as a student.
Assess Your Situation
You may want a credit card, but can you actually afford one? While the money you use on cards allows you to make purchases even if you don’t have the cash on hand, you have to pay it back with interest. Not having a steady income can make this process difficult. Plus, under the Credit CARD Act of 2009, the bank has to verify income information for applicants under the age of 21. This means that you must have some form of steady income that does not include parental support. If you don’t have a part-time job yet, you may need your parents to co-sign on a card for you.
There are numerous student credit cards available, so you should take your time to choose the best ones. While some cards offer student-friendly awards tailored to your school, these might also carry higher interest rates. Your best bet is to choose a card with a relatively low interest rate and no annual fee. If you can’t get a low APR, try to pay the card in full every month to avoid interest fees. Keeping your card purchases low enough to pay in full each month is ideal for avoiding long term debt that can cause serious financial problems when you graduate, too.
Exercise Good Credit Habits
Credit can be helpful in college, but cards can adversely impact your credit score if you don’t use them responsibly. Many students find themselves in Catch-22 situations because they don’t have credit history to apply for the best cards, but they still need to build their scores in order to qualify for financing from any source. One way to accomplish this is by making timely payments on one card at a time. It can take a couple of years to establish a decent FICO score, but only a few months to wreck it. Always pay your bills on time and contact the lender if you are in need of an extension for making your payment.
Graduation comes with even more exciting changes. If you have maintained a good credit history during college, you will likely find more financial opportunities after you gain your diploma. These can include getting a new car, buying a house or going on a well-deserved vacation. As a student you know that nothing ever comes easy, and good credit is no exception. Establish credit responsibility early on so the good habits will stick with you for life.KA DHIIBO RAYIGAAG UGU MACQUULSAN FADLAN WAXAA REEBAN WaXII AFLAGADA AH IYO WXII QIBIIL AH