5 Responsible Ways to Establish Credit in College With Credit Cards
It starts early. College freshmen arrive to campus only to be bombarded with student credit card offers from day one, increasing the likelihood they will spend too much, carry big balances, and enter into a lifetime of debt. Thankfully, there are ways for college students to establish credit with credit cards and do so responsibly. Keeping these tips in mind will help students pay off their balance each month and graduate from college free from credit card debt.
1. Carry only one credit card. With so many opportunities for college students to get credit cards, it’s easy for them to get carried away and end up with more cards than they can afford. By having just one credit card, students are more likely to keep up with what they owe, and it will be easier for them to establish credit.
2. Use the credit card for one thing only. By limiting credit card purchases to just one thing like gas for the car, groceries, or textbooks, college students are more likely to know exactly how much they owe at the end of the month. If the items designated for credit card purchases are essentials – food, for example – students should know before making a purchase that they’re buying something they can afford.
3. Use the credit card sparingly. College students can establish credit even if they almost never use their credit cards. By just using the card a few times a year, students will be able to build a good credit score, and doing so also makes it easier to pay off a balance since students owe less money.
4. Get a family member to cosign. If you’re a college student thinking about a credit card, see if your parents or other family members with a good credit are willing to cosign with you on a card. College students often sign up for credit cards when they’re away from home, neglecting the fact that cosigning with a family member may allow them to get a credit card with a low interest rate.
5. Shop for a low interest rate. College students shouldn’t just fill out the first credit card application set before them. Many banks, credit unions, and other institutions offer credit cards with competitive rates. These cards are often geared toward college students trying to establish credit.
While it’s easy for college students to head down a slippery slope ending in mountains of credit card debt come graduation time, there are still ways for them to use credit cards responsibly. Considering the credit card options available and knowing how to avoid several common pitfalls can go a long way for students trying to establish credit. In the end, the careful use of a credit card can bring financial rewards.
This is a guest post by Dee Barizo from The Best Degrees, an online school site that picks the top online degrees. Also, the site provides tuition rankings for students looking to save money on their education.