Greatest Students Credit Cards

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.

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:

• 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.