Do you find most of your friends end up their college with huge credit card
debts to repay? What ails them? In this article we take a look at the 3 worst
mistakes students make with their student credit cards, and pay for it heavily
later on in their life.
1. Sign up the first offer you receive
A student is offered a number of credit card when he or she enters the
college. A good thing would be to contact the financial aid office to get help
on which card is better. Ask your friends, get their opinion, see how well they
are faring with their student credit cards, compare various offers that you get
on a credit card comparison website online. This will ensure that you have made
an informed decision. Else, you could land in trouble.
2. Max out the credit limit
Credit card companies are quite generous in giving huge credit limits by
student's standards. Student's should not take this as easy money and max out
the credit card. A good thing is to keep the credit card balances to below 30%
of the maximum credit limit. This will keep them in the good books of credit
card company and won't invite huge penalties and high APR's.
3. Don't repay on time
Taking a loan (yes every expenditure on credit card is a loan and has to be
repaid with interest) and defaulting on repayments, doesn't go well with credit
card agencies. When they find that a default on repayment has taken place, they
increase the APR's, take back all rewards and slap late payment fees. This also
doesn't goes well with the credit rating agencies.
Credit card is there to help you in times of difficulties and it has to be
used wisely to build the credit. If the credit card companies find that your
credit card use is judicious, they will increase your credit limits, lower
interest rates, throw in few more rewards etc. This will seriously help in
building a good credit history.