Students and Credit Cards: Basic Rules to Follow

This article is part of the Students and Credit Cards series.

We’ve recommended that students get credit early and use it wisely to establish a healthy credit record.

Unfortunately, that’s easier said than done. There’s a reason laws like the Credit CARD Act of 2009 get passed: students averaged over $3500 in credit card debt, with 85% of cardholders carrying a balance from month to month and paying hefty fees and interest.

How to avoid those pitfalls? Here are some thoughts:

  • Never incur any charge on your credit card that you don’t intend to pay off in full by the end of the month.
  • Heed the words of our good friend Paul Richard of the ICFE: “If you can eat it, drink it, or wear it, it’s not an emergency.” That means you shouldn’t pay for it with credit.
  • Read the fine print. Know the terms of your credit accounts, including hidden fees and default policies.
  • Take time to budget. Know what you can afford and avoid incurring any debts your budget can’t handle.
  • If you must carry a balance from one month to the next, always pay more than the minimum required payment.
  • Use automatic payments if possible. Avoid making late payments however you can; using your bank’s online bill pay to make an automatic payment is easiest if you can afford it.
  • If you fall behind, answer the phone when your creditor calls. If you ignore them for too long, they’ll sell your debt to a collection agency—and wreck your credit rating in the process.
  • Keep your cards safe, and check your credit report for free at periodically.
  • That’s the only place to get a free credit report. Any other places that offer credit reports & scores for free are probably scams.
  • If you want to find out what your credit score is, avoid things like VantageScores. Your FICO™ score is the only credit score that matters.
  • At this stage, one credit card is all you need; don’t apply for store cards to get an extra 15% discount.
  • Remember, your only objective in using credit is to establish a good credit history for the future.

Credit is something that can’t be reasonably avoided in modern society. By being responsible and starting early with good credit-using habits, today’s students can be tomorrow’s business owners, homeowners, and have the kind of positive credit ratings they need to get the most out of life.

Speak to our certified Financial Coaches to review all of your options and discuss best strategies for getting out of debt.Speak to our certified Financial Coaches to review all of your options and discuss best strategies for getting out of debt.

About The Author

Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined in 2003 and has over two decades of experience in the industry.