What Every College Student Should Know About Credit Cards

Every college student should realize that credit cards are simply money that you're required to pay back later on. Although, used with discipline and responsibility, credit cards can be a beneficial resource in case of some sort of financial emergency. Schools offering Accounting & Finance degrees can also be found in these popular choices.


What Every College Should Know About Credit Cards

There are many reasons to worry about a child who is off attending college: are they eating enough? Are they driving safely? Do they have enough money? Student credit cards can be a great way to remove most of the worry about the last question. However, there may be as many good reasons (helps to build a credit history) as bad (overspending) for students to possess plastic. So what should college students know about having a credit card?

Having a Credit Card is a 'Great Responsibility'

In the 2002 movie Spider-Man, Tobey Maguire's character Peter Parker is told by his Uncle Ben (played by the late Cliff Robertson), 'With great power comes great responsibility.' The same could be told to the thousands of college students holding a credit card.

While having a credit card can give some students and parents peace of mind, they can also be a temptation and used to excess. According to the United States General Accounting Office, as reported in 2013, 33% of college students had at least one credit card; of those students, a quarter of them had made at least one late monthly payment, while more than half of those individuals had also made more than one late monthly payment.

'Knowledge is Power'

As English philosopher and author Sir Francis Bacon wrote in 1597, 'Knowledge is power.' It's a phrase that could easily be applied to college students seeking credit cards. There are a few important things these students should be aware of:

  • The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 prevents anyone under the age of 21 from applying for a credit card without proof of adequate income or parental co-signing.
  • Look for a credit card with a zero Annual Percentage Rate (APR). If your card does not have zero APR, check on the statement for the percentage you are being charged. Call the credit card company and ask for a reduction in your APR; in some cases, credit card companies will honor such a request.
  • Know the credit limit on the card. It might be a good idea to start with a lower credit limit to remove the temptation of overspending. Between $200 and $500 is a good place to start.
  • Get a card that does not charge an annual fee, if possible. In some cases, you might have to pay an annual fee until you have established a good payment history. After about a year or so, most companies will then waive the fee.
  • It might sound like a cliché, but read the fine print. Understand details about late or missed payments, cash advances, grace periods and possible cash-back bonuses.
  • Pay off your balance each month. You may not realize how quickly you can accumulate debt by carrying a balance each month.
  • Avoid using the credit card to pay your tuition. Use the card for simple purchases or emergencies that you can pay off each month.

Credit cards can certainly make your life at college easier; find out about some gadgets such as smartpens and flash drives that can help do the same.

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