Ready to build your credit history? Probably your first foray into this kind of adventure is through your very own student credit card. But before you sign that application form, here are five things you need to know:
1. They come to you. If you still do not have a student credit card, don't worry. Credit card companies will come to you and if you're currently enrolled, they will find you. Many of them even visit school campuses and actively offer their credit card services to students right inside the campus grounds. They will even throw in a few freebies like coffee mugs, stickers, t-shirts, pens and the like if you sign up.
Even if you don’t find one in your own school, you could simply go online, shop for the best interest rates and then give your bank of choice a call. Or you can take advantage of their offer by applying online.
2. Your need for a student credit card depends on whether you can afford it. Sure, a student credit card offers the convenience that cash cannot – it's safe, you get access to money 24/7 and unlike cash, a lost credit card can be replaced. However, it is still a question of whether you have enough funds to pay your balances monthly whether in full or in minimum payments.
Student credit cards are notorious for giving their carriers a sense of independence that can go haywire if they don’t watch out. Small purchases can pile up on a monthly basis and pretty soon, even the minimum monthly payment is difficult to reach. You will also need to watch out for other fees and charges such as carrying or finance charges, annual fees and cash advance fees. If you add these to your regular transactions, you could end up with a pretty steep bill.
3. Fixed rates don’t last. If you got your student credit card at a low interest fixed rate, lucky you. But your nice interest rate may not always remain that way. Credit card companies can change your interest rates at any time, provided they inform you at least 15 days before and there's little you can do about it. Just keep it mind that it may or may not happen. Be sure to read your agreement when you sign up so you will know what to expect in the future.
4. You can't always trust your bill. Surprised to find a bill for a pair of expensive flip-flops you never bought? You're not the only one. Many consumers find items on their credit card bills that they've never actually paid for, so it's a good idea to always, always check your billing statement when you receive it.
If there are dubious or false entries, call your credit card company to dispute it. If there are fees or charges you don’t understand, it won't hurt to ask questions. After all, you are the client and the credit card company is offering you a service. You have every right to question anything on your credit card bill that you find suspicious.
5. You can ruin your credit history if you're not careful. Bad credit is worse than a disgruntled ghost. It can haunt you for a really long time if you don’t handle it well. The few thousand dollars you owe now when you're still a student may not seem like a lot, but it can quickly balloon into a debt you may have a problem paying back in the future. And when it reaches that point, you could hurt your chances for other loans and mortgages you might be interested in when you're finally out of college.
If you don’t have a student credit card now, you might want to ask yourself if you really need it. And if you do, ask yourself if you can afford it. If you can, have the self-discipline to use it well. A well-managed student credit card is your first ticket to building a credit history that you will be proud of down the line.
Mario Churchill is the owner of a credit card website with links where you can apply for a credit card which best suits your needs.