If there is one thing college students are pre-approved for, it's credit cards. Banks from all over send applications to students in the mail, in addition to the recruiters they send to campus who hand out freebies with every contract.
Since high school, every student has been hearing that it's best to stay away from such applications and recruiters. Nonetheless, 76 percent of undergraduates have at least one credit card, and many juggle more than one, according to a Nellie Mae study. While it seems college students might not stay away from credit cards as they've been advised to do, they can certainly spend the time and effort necessary to be responsible with their precious plastic.
Most students accumulate enough in student loan debt that credit card debt on top of that would make for a difficult period after graduation, so by managing their credit cards, students can prevent falling so deep into debt that they can't see their way out.
Knowing your interest rates and being aware of any gimmicks or hidden fees before signing that contract will help keep you in control of your bills. Still, keeping the number of credit cards you're using down to a bare minimum and only using them for purchases you know you can afford will help you be sure to keep out of credit card trouble.
Cards shouldn't be treated as loans, but as 30-day advances that you will be able to pay for later in the month -- as soon as the bill comes. If you need money badly, you should consider a loan instead because the interest rate will be much lower.
Also, paying off the monthly balance is vital for students because it will keep them from letting interest increase their debt. By paying only the monthly minimum, students end up accumulating great amounts of debt and then they pay even more interest on that debt.
However, credit cards aren't just some tool for corporations to fleece poor, unsuspecting college students.
When used responsibly -- which is something college students rarely do with anything -- credit cards can be great instruments for building a good credit record.
All those fast, foreign cars offered at incredibly cheap monthly payments as advertised on television aren't for people who have M.C. Hammer's credit history. They are for people who make their payments on time and in full, every time.
So, if a house, car or any other major purchase might be in your future, it's okay to say, "It's cool. I'll just put it on my card," when making small purchases to build credit.
Just make sure not to say, "It's cool. I'll have the money by next month," when it comes time to pay off those small purchases.
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