First-time owners of student credit cards must be properly oriented on all the important aspects of owning a credit card. Because some students are overwhelmed by the sudden increase in their buying power, the first impulse is to use it immediately. With that power, however, comes the responsibility to pay. This facet is what most of these young people overlook which often results in accumulated debts they end up paying for years.
There are a few generally accepted “rules” for proper usage and management of student credit cards that all new cardholders must remember. These can help young people avoid getting into heavy debt early in their lives. They should realize as early as possible the consequences that a bad credit history can bring. Buying a new car or acquiring a new home may be very difficult if that happens.
Tips for New Student Credit Card Owners
For small everyday items like groceries, soap and other toiletries, students must pay in cash as much as possible. A debit card tied up to their bank accounts may be used to pay for such petty items. Charging them to your credit card will quickly fill up your spending limit without you noticing it. Aside from that, the interest that will accumulate on such purchases will only add up to the cost of these items. This only defeats the purpose of owning a credit card.
Another important tip – use your cards for essential items only. You must be able to distinguish between the essential items you really need and those that you can do without. However, even for the essentials, if it is beyond your reach, skip buying it even if your credit cards can cover for it. There is no sense buying if you cannot pay your student credit cards when they become due. Just find another way to buy it.
For most young adults, cash inflow is very limited and therefore must be handled well. Learn how to budget available funds against necessary expenses. Plan on how you will spend for fuel, groceries and other items. Make provisions also for sudden and unexpected expenses that may come up. Take into consideration when you are going to get paid or receive the funds and when you need to pay out.
Sometimes, the concept of credit card interest rates is difficult to comprehend for young people. They need to realize that the full balance of their credit card accounts must be settled to avoid interest from piling up. Paying only the minimum amount due will only result to accumulation of interest on the remaining balance. The interest incurred eats up the spending limit and adds to the total outstanding balance. This exposes you to the risk of exceeding your credit limit and when that happens, additional penalty charges may be imposed.
In short, you end up paying for much more than the amount of the actual purchases you made. Paying for your student credit cards will then be a big burden. They will cease to be the tools for convenience they are supposed to be.
Victoria Hemmingway is a free lance writer with several interest and specializations including the finance, general credit cards, and student credit credit cards markets.