Finding the Right card for a student
Truth is, there isn’t really a "right" card for a student. What matters most is
responsible use of credit. Few young people realize that the best use of a credit
card, early on, isn’t to make it easy to buy something at the mall, or even to purchase
books and school supplies. Good use of a credit card can help establish a solid
history of credit use that is invaluable and, increasingly, rare. Not rare are the
card issuers that would like to put a credit card in your wallet – and let the interest
payments pile up after that.
Say you put a $1,000 clothing spending spree on your card, at a (not rare) interest
rate of 18%. If you make only the minimum payment each month, that $1,000 in clothing
will take 12 years to pay off, and cost an additional $1,115 in interest – and that’s
before any late fees or other penalties, if incurred. Even more important though
– getting your first apartment out of school, on your own, is very difficult without
a proven record of responsible credit use.
The "musts" of using credit wisely
No one wants to see someone just starting out get into trouble with credit. A few,
easy to remember rules to live by (applicable if you’re 18 or 118) will keep anyone
on the right track:
We can Help
At CreditCardApplications.com, we think you can make the right decisions about credit – and we get you started in the right way. Take a look at our carefully selected
Cards. We offer the "right" mix of card that feature low annual fees, and low interest rates – and help you to use credit wisely!
- BUDGETING – include realistic figures for credit card spending in your budget, along
with all the other items (food, rent, supplies, entertainment). If you’d like to
"test the waters" (that is, you’re not sure if you trust yourself!), a
Secured Card can provide all the benefits of a credit card, with none of
the credit risk downsides (the card is "secured" by money you have in an account
with the issuer). And take time to set something aside – try putting 10% of what
you earn in a savings account – you’ll be glad you did one day!
- DON’T "TAKE IT TO THE LIMIT" – Simply put – say away from spending up to the credit
limit you’ve been issued. According to Fair, Issac (the main credit rating bureau
in the U.S.) a maxed-out card is one of the main "red flags" when other businesses
look at your credit rating. Moreover – that cushion between what you owe and your
spending limit may be a rainy-day lifesaver – so always try to keep at least 20%
of your total spending limit "off-limits". For instance – with a $2,000 spending
limit, try to keep $400 off limits – set a personal limit of $1,600.
- BE ON TIME, EVERY TIME – When you get a credit card statement – note the due date,
and then mail the payment at least 10 business days before (or use online banking
to achieve the same result). Remember the "maxed-out" advice from the rule above?
Late payments are the #1 red flag that could get you denied for any credit in the
future – so don’t be late!
- PAY MORE THAN THE MINIMUM – Don’t get stuck in a trap – we all have friends that
are still paying for a pair of jeans that were purchased during the last presidential
administration. Don’t be that person! Avoid spending this month, and put that amount
towards a larger monthly payment – you’ll be glad you did.
- AND IF YOU’VE ALREADY BEEN IN CREDIT TROUBLE – Make sure you stick to any payment
plan you’ve agreed to with your creditor – communication is the key. Also - see
our favorable list of
Challenged Credit Cards – they could help you to re-establish the credit
you’ll undoubtedly need later in life.
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