Just as the summer turns into fall, the time for going back to school arrives for many students of all ages and of grade levels. Regardless of the age group, there are often many, many expenses associated with returning to school. The costs for College and University students are exceptionally high and while some may receive grants and student loans, there are many expenses that arise throughout the year, aside from the funds that are required to cover the tuition fees.
As you can see, I have a bit of a ‘back to school’ theme going on and while on this topic I want to include the common occurrence of having a credit card to help support these annual costs. While you may be considering getting a card of your own, if this is the case, then there are some important details you will want to consider.
If this is your very first time applying for a credit card, there may be some instances where you may have a little bit of difficulty securing the card. This is because credit lenders prefer lending credit to individuals with a good credit history. If however, you have never had a credit card or a bank loan before then your credit history is more than likely to be sitting at zero.
On a positive note, there are many credit card providers that offer credit cards to students and this can actually be an effective way for young adults to begin building a solid credit history. In fact there are many banks and financial institutions that gear specific cards to students, knowing that they are just starting out. These cards typically come with a lower credit limit, with the goal of preventing these new card users from wracking up too much debt – debt that they can not pay back. Credit cards can come in handy when paying for travel, textbooks, and other expenses such as emergency situation. Remembering to be responsible in your spending choices is however very important.
Before entering into a credit card agreement, you should follow some standard commandments and always read the fine print’ – rules and regulations that if not followed can get you into serious credit card trouble. Being aware of these details can you avoid getting too far over your head, in the form of unmanageable debt.
1) Interest
If you are lucky to secure a credit card with a lower interest rate, then you will have the ability to save yourself some money each month. Not only does this enable you to pay off the full monthly balance each month with more ease, if on the other hand you can not pay it all off each month, or one month here and there, then you will be charged less interest on the outstanding balance. If, however you accumulate a lot of credit card debt, regardless of the interest, it may still be very challenging to meet the payment demands. Therefore, you want to do your best to try and avoid overspending and only use your credit card when it is absolutely necessary.
2) Grace Periods
Each month that you use your card, you typically have a grace period of between 20 to 30 days to pay your bill. If you do not pay it before this timeframe ends then this is when the interest fees will kick in. If you can get in the habit of paying off the full balance before the grace period ends you can take advantage of your credit card and use it as a interest-free short term loan arrangement. While it is not always possible to pay off the full amount then you will want to ensure your card has a lower rate or refrain from using it altogether until you have the funds to repay it.
3) Paying on Time
Whether or not you are planning to pay off the full amount or carry a balance from month to month, you will want to be sure to pay your bill on time. Sometimes you may only be able to make the minimum balance payment and other times you will be able to pay more. Either way, consistently paying on time will help you develop a good credit history. It is extremely important to also know that any missed payments can quickly derail your credit score and make it more difficult to secure a credit card or a loan in the future.
Aside from a dismal credit score, not being able to make payments on a regular basis is also a sure fire way to increase your debt. Keeping on a payment schedule of at least the minimum amount – however paying off more when you can, can help to keep your debt more in check.
Again using your credit card wisely and only in emergencies or for designated purposes can help you reduce your debt. The last thing you want to do is take on more debt that you can handle, especially in the beginning when you are still getting use to using your credit card and juggling school demands at the same time.
In some cases it makes sense to leave your card at home so that you are not tempted to use it. This tip also can be beneficial later in life. I myself use this method of saving as a way to ensure I won’t fall into a pattern of impulsive buying. As you can see the credit card habits you develop can serve you well down the road, as your financial demands become greater. Essentially, you can set yourself up to be a successful credit borrower from the day you begin your post-secondary education and as you look towards your future.
