Financial Education
Credit Cards
Getting Started...
With a reported $13 billion in discretionary income, college students represent a huge market for credit card companies (Kara, Kaynak & Kucukemiroglu, 1994). There are many good reasons to have a credit card as a young adult, including emergencies, the ability to rent a car or buy items online, building a credit history, etc. There are also many reasons that are NOT good for obtaining credit, including making impulse purchases more convenient to make, buying items you can't afford, online gambling, etc.
The first step in using credit wisely is selecting the right card. Here are a few questions to ask when selecting a credit card:
- Is there an introductory rate? When, and by how much, will it increase?
- Is there an annual fee? How much is it?
- What other fees are attached to the card and how are they assessed? (ex: transaction fees)?
- What is the grace period?
- Is online banking available?
- What is the credit limit?
- Are there any offers or rebates associated with the card (ex: frequent flyer miles)?
Try using this credit card selection worksheet to help your organize the information you find about different cards.
Once you receive your card, there are a few more things to keep in mind. First, be sure to set limits for yourself when using your credit card. Your limits will be unique to you and your goals and priorities. You may want to decide only to use your card for emergencies, or you may just want to use it for necessary items such as textbooks each quarter. Whatever limits you decide on, be sure to hold yourself accountable and stay within them.
Second, always remember that your every move is being tracked by credit reporting agencies. In other words, your credit score, which may become very important a few years down the road when you go to buy a home or a car, will be lowered every time you pay a bill late, or rack up too much debt. You do not want to use more than half of the amount of your credit line as this will make you look desperate on a credit report. Every credit card application you have ever filled out will also appear on your credit report. Make good decisions now so you can reap the benefits of a high credit score in the future.
Already in trouble?
FREE credit counseling and debt repayment planning is available to students in the Student Wellness Center in RPAC. General credit card education is also available. Call Kate Trombitas at 292-4527 to make an appointment today.
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