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10 Smart Student Credit Rules

I applied for my first credit card as a freshman in college, it was an AT&T branded Citi card that gave me free long distance phone minutes and a few rewards points. I was fortunate to have started building up my credit at the age of eighteen, which would prove to be crucial later on. I was even more fortunate never to have fallen down the credit card debt hole so many college students slip into, in part because I know my mom would’ve been furious. 🙂

To help all the rising freshmen, or perhaps the parents of rising freshmen, I offer up these ten rules for smart credit. Some of these are credit card rules and some are simply credit rules, hopefully all of them are helpful. Here are ten tips for students looking to build credit but not credit card debt:

10 Credit Rules for Students

  1. Check your credit reports: The Fair Credit Reporting Act gives you the right to review your credit reports and specialty reports [3] once a year, take advantage and review it for errors. Your credit history is often used whenever you apply for jobs or try to find an apartment.
  2. Get a credit card early: I recommend applying for one of the best student credit cards [4] and using it for small purchases each month. The sooner you can establish your credit, the better. When you graduate, a lot of things will depend on your credit so establishing it early is crucial.
  3. People will argue that you shouldn’t give a student a credit card ever. I think that’s a mistake, it’s like never letting a teenager drive. You want them to learn how to use something responsibly, not shield them from it until some magical clock says they’re suddenly responsible enough to drive or use credit.

  4. Don’t spend it unless you will pay it off: If you’re paying 18.90% APY interest on your credit card, it will take you over two years to pay off a $100 purchase if you pay the minimum of $5 a month. Over the two years, you’ll be paying $21 in interest for absolutely no reason whatsoever. Don’t spend the money unless you have it and can pay it off after the grace period.
  5. Set reminders for yourself EVERYWHERE: Always pay on time and set yourself up for success by putting reminders everywhere so you never pay late.
  6. Set up electronic bill pay: Set up an online account with the credit card company you have a card for and then link a bank account so you can pay with a click of a button. By lowering the barriers to payment, it’s easier for you to pay on time. You also save yourself a stamp and a rushed trip to the post office because you’re trying to get the check out on time.
  7. Keep a master card list: There will come a day when you will lose your wallet or purse, with every credit card along with it. Keep a master list of your credit cards and their customer service numbers so that you know who to call in case you ever lose your wallet.
  8. Never ever take a cash advance. Cash advances hit you with a fee when you make a withdrawal and then crush you with interest. There is always a better alternative to a cash advance, you just have to look around for options. You should never ever take a cash advance.
  9. Keep your identity safe. Don’t leave your cards lying around, don’t leave your statements lying around (in fact, go the paperless finances [5] route), and treat the credit card as you would cash.
  10. Review your statements. When you get a statement, review ever charge on the list and make sure it’s legitimate. You won’t be liable for much if you catch the fraud early, so review everything.
  11. Don’t let anyone “borrow” your credit card. You should treat your credit card the same way you treat your driver’s license. It’s yours and only you should be using it. Never lend it out to anyone because if they do something wrong with it, you get to take responsibility of it.

I limited myself to listing ten tips but if you have one that’s not on the list, please let me know!