Having a credit card while you’re still a student can be both beneficial and important for you in life. Many banks and financial institutions often promote student credit cards so they can understand how it works early on.
While these student credit cards are often provided exclusively to students, they can also pose a serious problem, especially if they are not responsible with their credit.
As always, having a student credit card requires a level of responsibility on your behalf. Here are some tips you need to know about the best practices for student credit card use.
Never Spend More Than What You Can Afford
One of the greatest mistakes that many students often make is spending way more than what they can afford to pay.
Most students think that having a credit card is a free pass to spend as much as they can since they can pay it all at the end of the month.
The thing is, there are also interest rates and other charges that do not immediately reflect.
You want to pay off your monthly bill in full as much as possible, so be sure to keep your expenditures very low.
Be Careful With Interest-Free Offers
A lot of credit card companies often promote their student credit cards with an introductory interest-free period.
Many of them go for around 12 months of zero percent interest.
The company will not charge you with any interest rate, but the period does not last a long time.
If you do not pay off all of your bills before the end of the promotional period, you will most likely suffer from paying all of the interest rates that have built up from your remaining balance.
Always Have a Budget
We all know that studying at a university or local college can take up all of your time and money.
This is one of the reasons why many students often get a student credit card to help them with some financial emergencies.
While you have a student credit card, always make sure that you also have a monthly budget so you can pay off your bills on time and still be able to afford everything else.
It helps diminish impulse buying and keeps you on your feet.
Avoid As Many Fees As Possible
There are a lot of student credit cards out there that cut out the usual fees that you see on other kinds of credit cards.
One of which is the annual fee. Research and only get a student credit card that does not have any annual fee.
You can still go for a student credit card with an annual fee, but make sure that it is also offset with a lot of perks and many other incentives.
Always Pay On Time
This is one of the most important parts of having a student credit card, or any credit card for that matter.
Always pay your bills on time. Many students often forget about paying their monthly bills until it is too late.
Try to set up a reminder a few days before your due date so you can remember to pay your bills.
There are also mobile banking apps that have an autopay feature that allows you to automatically pay your monthly credit card bill.
One Student Credit Card is Already Enough
Many students often want to get as many student credit cards as they can so that they can have a lot of options.
Once you’re eligible to have a credit card, you only need one card that can handle almost all of your needs.
Applying for multiple credit cards can affect your long-term credit score.
Try to limit your student credit card to one so you can make your credit-building journey a lot easier.
Always Use Cash Whenever Possible
When you’re out on a summer break, or you simply want to go to a bar or restaurant, it is always recommended that you use cash instead of your credit card.
These places can lead you to overcharge with your card as you enjoy your stay.
Every time you use the card to purchase food or drinks, it means that you’re also adding up to your bill and other charges.
Bring cash with you whenever you’re going to places like these.
Avoid Cash Advances
Another useful credit card feature is cash advance, but this should only be used for emergencies.
Cash advances allow you to withdraw money from your credit card, but it will also have its own set of interest rates and charges.
If you have to, make sure that you don’t exceed 5% of the total credit limit and pay it immediately.
You do not want to accumulate as many fees at the end of the month.
Take Advantage of Your Rewards
A lot of student credit cards nowadays offer cash-back rewards for every transaction that you make.
Take full advantage of these rewards once you have accumulated enough cash back rewards.
Many of these cards often allow you to redeem your cash-back rewards as a statement credit, which you can use to pay off your monthly bill.
You can also use the rewards to either pay some of the fees, including the annual fee.
Start Learning About Credit
As early as your student days, make sure that you start learning about credit and how it affects you for the rest of your life.
Having good or even outstanding credit as early as now can help unlock more features and benefits once you have a stable job.
You get to have a better credit score, which translates to having lower interest rates, and even gain access to exclusive credit cards that can help you save even more money.
A student credit card can help you build a good credit history, which is why it is important that you start taking good care of your credit score right now. Get a good credit score by following the tips mentioned above.
These behaviors will make you a responsible credit cardholder, which you can fully benefit from when you get older.