So, you’re a newbie college freshman or you’ve finally become an upperclassman (or woman), and you find yourself bombarded by student credit card offers. After careful—or not so careful—deliberation, you chose one and it’s finally in your hands. And… now what? Just throwing that plastic down carelessly whenever you feel like it is a surefire way to dig yourself into an early financial grave. So put that back in your wallet and take a moment to think: what’s the best, most responsible use for your newly arrived credit card? The answer may not be the same for everyone, but for the most part, the tips below will be useful for anyone looking to get the most out of their credit card.
Know your credit card.
Does your credit card have a high annual percentage rate (APR)? What types of fees and penalties does it come with? What kind of incentives does it offer? Credit cards come in many shapes and sizes, each one with different kinds of unique perks or rewards, but also with different restrictions and drawbacks. For example, the Deserve® Edu Mastercard doesn’t require a social security number or a co-signer, and it also doesn’t have any foreign transaction fees, making it a fantastic choice for international students. On the other hand, the Discover it® Chrome and the Citi ThankYou® Preferred Card are best suited for students looking for great rewards cards. One has 2% cash back on gas, and the other has 2% on entertainment, respectively. Both offer 2% cash back on dining, which means these cards are a great option for students who are paying their everyday expenses with a credit cards. If you understand what your card is and how it works, you will have already taken the biggest step forward in order to maximize its use.
Once know your card, it’s time to take full advantage of its features and work your way around its downsides to get the best bang for your buck, while simultaneously improving your credit score. If your credit card has a low APR, then you can afford to be a bit looser with your spending as carrying the balance from month to month won’t burden you too badly. On the other hand, if your credit card has a high APR but great rewards or a sign-up bonus, you’d be wise to stay away from big purchases until you’re sure you can pay them back. Then, once you’re able to, shell out the big bucks while still always paying on time to avoid those nasty rates, and cash in on your card’s benefits.
What are your spending habits like? Does money burn a hole in your pocket or are you more careful with your cash? Depending on what you spend money on—and how often you spend that money on it—you’ll need a credit card that fits your individual needs. If you already have one, though, how can you make it work for you? Not everyone has a credit card that aligns perfectly with their expenses, and even if they do, knowing when to restrain yourself and when to loosen your grip will make the biggest difference in your card use.
Think about your latest expenses. Restaurants, movies, gas, books, clothes, tuition—everything. What is costing you the most? What are you paying for most frequently? If you already know what your card is best for, then don’t hesitate to use it. Stay away from purchases that won’t let you reap its rewards though; don’t give in to impulse buying just because credit cards are a convenient alternative to paying in cash. Regardless of whether you chose the ideal credit card for your specific needs or not, if you know when and what to swipe it for, any card can be made to work for you instead of against you.
Know your goal.
Even if you manage to land a credit card with great rewards or features, student card holders should always follow the usual guidelines for using a credit card: pay on time, and try to pay in full. Instead of thinking of your credit card as the end goal, think of it as the means to an end. What you really want to do is build up your credit so that in the future, when you decide to take out a loan or rent an apartment, the people on the other side of the field know you’re trustworthy and a good sport. Credit cards do make purchasing things convenient, but they should never be your only method of payment unless there are extensive benefits to doing so. Credit is a much more important currency, with which you’ll be able to course through adult life with greater safety and comfort.