Going to college is, for most students, the first time they'll feel really independent. And, accordingly, the rest of the world starts treating them like adults too, from the expectations of college professors to the credit card offers that will start flooding in. And just as it's important to study hard for a major, it's essential to learn what are the real benefits and repercussions of having a credit card.
This is the first opportunity you have to establish credit, and if you abuse it now, it will follow you for years to come. Bad credit can affect everything from your ability to get a cell phone, buy a car, rent an apartment, or purchase a house to your chances for getting a job -- more employers are now checking the credit history of potential employees before hiring.
To get off to a good start with your credit card, here are five tips to learn -- life will test you on them later.
1. Don't take the first offer you get. Offers will come to your mailbox, appear at stores where you shop and there might even be people from the credit card company on campus, offering cards to passersby. It's smart to collect as much information as you can about different cards, and then make comparisons. Don't apply for a lot of cards, as simply applying can in itself hurt your credit, if you do it too many times.
2. Don't treat it as income. A credit card is not free money, though it sometimes feels like it. Remember that a credit card comes with interest, so if you don't use it responsibly, you'll be paying for what you buy -- and then some. Credit cards can definitely be convenient, but remember that you should only spend money that you're guaranteed to have coming in.
3. Remember that there's no such thing as a free lunch. Those enticing benefits of credit cards -- the airline miles, the shopping rewards, the cash-back offers -- they aren't always what they appear to be. It might sound like they're just a great free benefit of having and using a card, but the true cost of those programs show up in things like annual fees and interest rates. You may be paying for it, one way or another.
4. Be a micro-manager. Having a credit card is a big responsibility, and you need to be active in monitoring your use of it. Keep track of payment due dates -- mark it on your calendar, set up an alert on your phone or computer, or enroll in an automatic payment option. If you're late in making a payment, you might not only have to pay a late fee, but your interest rate will likely skyrocket, making it more difficult to pay off your balance. You should also keep track of your credit score and overall credit health. You can get a free credit report once a year from Equifax, but it's a good idea to check more than once, so that you know exactly where you stand.
5. Pay attention to the news. Credit card industry changes have a direct effect on you and your card. Recently, Congress passed and President Obama signed into law the Credit CARD Act, which changed the rules of how credit card companies interact with their customers. Not only do they have to limit their marketing efforts on college campuses, but they must also give card holders more advance notice of changes in terms, among other things. Keeping up on the news will help in your financial life, but it's also a great benefit for your academic life.
When you use a credit card properly, it can be a convenient method of payment, and it can help you to establish your credit history. If you follow these steps, you'll be starting your financial independence on the right foot.
Courtesy of ARAContent
To find out more about credit monitoring and the power of your credit, visit www.equifax.com.© 2011 ARAContent
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