5-tips-for-your-first-college-credit-card
The number of undergrads who own credit cards has been declining the past few years -- dropping down to 30% in 2013.
But as students get closer to graduation, building good credit for post-grad purchases -- such as a car -- becomes increasingly important. Likewise, students who are traveling abroad should have a credit card on them in case of emergencies. And young adults who sign up while they are still students can also get special perks from their card provider if they choose wisely.
RELATED: Students should establish credit (responsibly) now
Despite the utility of credit cards, many students don’t know where to start when it comes to signing up for one on their own, especially if they still bank under their parents’ accounts. Here are some tips to help you get started.
Leave yourself plenty of time to get a card.
Generally, it takes 10-14 business days for your card to arrive in the mail after you apply. So, if you’re trying to get one before you travel abroad, give yourself extra time to apply in case of mail delays or other unforeseen complications. As a side note, don’t forget to notify your bank(s) that you’re traveling or your cards may be frozen.
Do your research before you sign up.
You’re probably getting a lot of junk mail from credit card companies trying to get you to sign up, but make sure to investigate them before impulsively signing up for a card. Look for a card with no annual fee, if possible.
A low APR -- or, annual percentage rate -- is good, especially a low purchase APR, which specifies how much interest you are charged if you carry over a balance at the end of the month. In addition, if you plan to use the card for a lot of back-to-back purchases right away and then pay off the balance over several months, look for a 0% intro APR, which will allow you to carry a balance from month to month for a set period of time without being charged interest on it.
Understand your card’s rules.
Each card provider offers different perks. For example, some give you more cash back or points for certain purchase categories such as entertainment and textbooks. Some may lower or waive the intro APR for the first few months you have the card. Other student cards may have no foreign transaction fees for certain countries or may keep your rates the same the first time you miss a payment.
Make small purchases and pay them off as soon as possible.
Paying your balance in full every month is key to developing good credit, as is not exceeding your credit limit (which will probably be relatively low since you’re a student). This strategy will also keep you from having to pay interest, which is usually only charged if you carry a balance past the monthly limit.
Using a credit card for large, spontaneous purchases is tempting, but your credit score lasts longer than a sudden trip to the beach. Businesses often check your credit score before deciding to sell you a car, allowing to you to buy a house and even choosing to hire you. Maintaining a good credit score (or developing a bad one) will have lasting ramifications.
Students who are considering signing up for their own credit card should know that there are some restrictions if they’re under 21. The Credit CARD Act of 2009 does not allow people under 21 to sign up for a credit card unless they have a co-signer (such as a parent or guardian) or an independent means of paying off debt. Underclassmen who still want to sign up should sit down with their potential co-signers and have a serious discussion about finances as their credit score -- along with the master account they’re “piggybacking” on -- will be impacted.
Kara Sherrer is a student at Vanderbilt University and a summer 2015 USA TODAY Collegiate Correspondent.