Congratulations on your new credit card. Used responsibly they can be a great way to build your credit standing and score, all of which will enable you to have greater purchasing power as well as a good reputation with lenders, employers, schools and more.
Whether you are a college student, recent graduate or a gainfully employed professional there are some safeguards that you need to take in order to ensure yourself against costly and potentially devastating credit mistakes. It is important to recognize that credit card companies do not always take your ability to pay into consideration so it is up to you to make sure you are a wise consumer.
First of all, make sure that you know and understand the terms of the card you have received. Hopefully you have shopped around for the best rates and have been able to obtain a great interest rate, with low or no annual fees and a flexible monthly payment schedule.
Once you have obtained your credit card there are some definite habits you should set for yourself in order to build a solid credit history. You really should refrain from using your credit card unless it is absolutely necessary and you should never spend more than you can afford to repay. For instance, if you find a beautiful dress (at your favorite department store) that is on sale for $50, you should crunch the numbers to make absolutely certain you can really afford to buy it. Let's take a look at what the financing might cost you with an annual percentage rate of 23 % and a minimum payment calculated at 3% monthly. It could take you 3 months to pay off the 50.00 at a total cost of only about $1.
However, if you make additional purchases during the month, let's say a pizza for $15, a pair of shoes for $45 and $120 for groceries, you now have a balance of $230. Over that same 3 months you'll spend an additional $76 spread out over 31 months if you pay only the minimum balance (say $10 or 3%) and make no further purchases. Credit really does cost; thought college students should carefully consider when and how to use a college student credit card for purchases.
Setting and sticking to a financial budget will empower you to make good credit decisions. It is also wise to try to pay off your balance in full each month. Be careful to pay attention to your billing dates as late payments will translate into late fees. Watch your spending and keep accurate records so that you never go over your limit which will cost you extra money from fees and penalties.
Find college credit cards as well as additional pre-paid credit card options and articles written by David Shapiro at CollegePlastic.com