Archive for September, 2011
Transition into adult hood can be an exciting time for young people leaving their parents house for the first time. This is a time when you find yourself, independent from your parent’s you begin to make your own decisions. For many young college freshman this usually also means the beginning the financial independence. Many college kids will get their first credit card or online car title loan in their first year of college. Having your first credit card is super exciting, but it comes with a lot of temptation too. As many of us know, it’s in the college days that many will make some poor decisions when it comes to credit card use, and end up in debt entirely. If you don’t have your parent’s help to bail you out, then you can get yourself in big trouble. So here just some small tips to keep in mind before going ahead and getting yourself that first credit card.
RESPONSIBILITY. Having a credit card is serious. Too many people take it lightly and then end up in serious debt. Avoid this yourself, by taking your commitment seriously and avoiding overspending.
LIMIT. Your credit card may have a small limit now, but it will continue to get bigger, especially if you are paying on time. For the time being, as a student with limited income, you should call your credit card company and limit them from raising your card limit. This will prevent you from spending more money than you should.
ONE CARD ONLY. Having multiple cards is a recipe for disaster, especially if you don’t have time to keep track of everything. Banks will try to get you a better card with a better rate, but you will only end up with several cards that will all end up with higher interest rates after the first 6 month introductory rate is over.
PAY ON TIME. If you’re going to use your cards to purchase things, make sure you pay your balance on time. This is the single most important thing that you can do. Even one late payment can affect you. The more you are late, the higher your interest rate will be. If you begin to miss an entire month, than your credit score will begin to be affected and you don’t want that…it’s a slippery slope, one you have to keep on top of.
PAY MORE THAN YOU CAN. Pay more than the minimum payment. If you only ever pay the minimum on your card, it will take you years to get it paid. Paying only the minimum usually only covers the interest on your card. If you always pay a little more than the minimum than you actually stand a chance at getting your balance paid off.
EMERGENCY USE ONLY. Try to save your credit card for emergency purposes, like if your car breaks down or you need to pay for a last minute class. Having no balance on your credit card serves as a sort of emergency fund to help you out in hard times.
BUDGET. Make a monthly budget and stick to it! This is simply the best way to avoid spending too much money.