If you are new to using a charge account, reading the small print when applying for a student card can save your credit in the years to come.
When you understand what can happen to hurt your creditworthiness you are better able to prevent problems.
Learning to properly use and manage a student credit card will have lasting benefits for you during the college years and for a lifetime.
Read the Fine Print
When you apply for a student credit card it is critical to read all of the small print in the credit agreement. Yes, it is boring and legal terms aren’t fun to read.
You are agreeing to every one of the terms in that fine print when you apply for a credit card. If only makes sense to protect yourself by knowing exactly what you are agreeing to do when you use your new credit card.
When you are in high school you can often use the excuse of “I didn’t know” and be granted a second chance. As a college student, you are now a young adult and responsible for the decisions you make.
There is no acceptable excuse if you do not bother to read the small print and reading the terms will help you avoid predatory lending practices.
Your credit card bill lists a minimum amount you are required to pay by the due date listed on the statement. You notice it says “require” to pay. That minimum amount due is an obligation you agreed to.
If your payment is late or you skip a payment, you will be charged a late payment fee. That late payment will also be reported to credit rating agencies and even one late payment on a credit card will put a black mark on your new credit file.
Living on a Budget
Living within your means is not just a catch phrase. Establishing a budget and sticking to it every month is a skill that can be learned with practice. For students accustomed to parents paying for all of their purchases, a budget may be something they have no interest in.
If you have not managed money in the past, it’s a skill that should be taken seriously. As a college student, you are beginning to build a credit file that will be associated with you throughout your adult life.
Check Your Credit Report
The three main credit reporting agencies begin building a credit file for you the moment you begin using credit as a young adult. Credit bureaus are not perfect and many consumers are shocked to learn there are serious errors contained in their credit file.
Unless they check their credit report once or twice a year, a person may not know of the problem until he is denied for a car loan, a credit card or a mortgage.
Your credit file and credit rating tell potential lenders quite a bit about your personal money management style. That credit rating that seems unimportant when you are a college student will gain importance when you apply to rent an apartment, buy insurance or make almost any financial transaction going forward.
Don’t Ignore Credit Problems
You may carefully choose a lender before applying for your first card. You may spend months or years paying that debt in a timely way only to have a financial crisis that leaves you unable to pay your bills.
Perhaps your student loans didn’t come through on time or a medical emergency caused you to lose income at a time when you had to use credit more than usual. Whatever the reason there may be a time when you do not have the cash to pay your bills when they are due.
The reaction of many people to such a financial problem is to bury their head in the sand. They avoid talking to creditors, do not offer explanations and the result can be a temporary problem with finances that becomes a long term debt problem.
If you have a good record of paying your bills there is a good chance your creditors will work with you to get past a temporary money problem.
Your credit card company can’t help you if they don’t know what is wrong. Call them the moment you realize you will not be able to pay the bills on time. As them to help you find a solution that will allow you to get past the problem and back to being a reliable, paying customer.
You can avoid surprises on your bills by reading the small print when applying for student credit cards. Save your credit by taking charge of choosing a lender and managing your money with a budget.
Know what the fine print says and communicate with your credit card company if you have a financial problem and can’t pay your bill. Remember, student cards are not a toy and always make sure to use them with responsibility and caution.