Credit Cards & College Students: Tips & Advice

You may or may not have a credit card… but if you're a college student, you're likely getting offers on a near daily basis. They show up in your mailbox and in your email, with you – the College Student – as the focus. On a tight student budget, they probably seem very appealing. It would be nice to buy that pair of jeans you can't afford or to be able to hang out with your friends at the coffee shop between classes; however, credit card abuse is a very real danger for college students. Before you decide to get one, or charge more on the card you already have, it's important to learn the dos and the don'ts.

Do – Find the card with the lowest interest rate you can qualify for. Your interest rate will determine the overall cost of your loan; and yes, it is a loan. Credit cards are not free money.

Do – Make sure you read the "fine print." Be sure you're getting what you think you're getting. Are there annual fees, membership fees, and/or sign up fees? Many a student has been surprised to receive their first credit card statement, before they've even charged a cent; to see a balance of $100, $200 or more.

Do – Strive to have no more than one credit card. The more credit cards you have equal the more debt you'll have when you graduate. Keep it to one and one card only.

Do – Make more than the minimum payments; even if only fractionally more. Optimally, pay the new balance off each month.

And now the don'ts

Don't – Be late on a payment. If you have a late payment, even once, your creditor can – and likely will – raise your interest rate.

Don't – Forget that incidentals add up big. A cup of coffee here, a pizza there, a few munchies for studying are all small potatoes by themselves, but when you do this throughout the month it will show in a larger balance than you expected. The best rule of thumb? Don't buy what you can't afford. If you have to charge something you can't pay off when the statement comes; make it something necessary.

Don't – Stop shopping around. You will continue to get new credit card offers and if you find a better interest rate; transfer any existing balance and close the original account.

Don't – Count on mom and dad to bail you out. You're an adult now and these are your finances, so be responsible. A nice side effect? You'll feel good about yourself and they'll respect you for making sound decisions.

You're in college to learn and, ideally, that should include managing your income vs. your debt. When you graduate with little to no credit card debt, you'll be glad you took the time to be smart with your money.