By Alyssa Frank
Getting a credit card in college sounds like a useful plan, but what are the real benefits? Are there any?
Throughout my time in college, I have yet to fall victim to the infamous plastic card that plagues students’ doormats and mailboxes with ads and promises of low eligibility requirements and manageable interest rates. However, I have seen even the smartest and most frugal of my friends pile on credit card debt. Here are some tips and things to avoid when deciding to take the leap into the world of credit.
As it is with most credit cards, the devil is in the details. Look for things like low interest rates and low annual fees. Read all the fine print, and make sure you understand the terminology that is used. Ask questions when you feel unsure, and make sure you are ready to be making payments consistently and in full to reach the best credit score you can.
One other key ingredient to credit success is having an income. Having that influx of money to help keep you afloat with your payments is crucial. It is easy to buy things when the responsibility of paying comes later, but don’t be fooled: those payments will come, and they will not stop coming if you don’t stay on top of it.
A friend of mine who works as a waitress got approved for around 500$ of credit and blew through it with the speed of a NASCAR driver. She is sitting now with about two grand in credit card debt because she never recovered from the initial deficit and has been caught in the cycle ever since.
There is hope for those who falter, however. An old roommate of mine who works in college athletics event management was out from work for a week or two and racked up about $1,000 in debt with her credit card. She worked some overtime when she got back to work and was able to chip away the debt over a month and a half. Diligence, discipline, and perseverance saved her from destroying her credit.
So how do you figure out what your line of credit will amount to? This is a flexible answer, where in most cases the security deposit you put down will determine how large this number can be. $200-500 is a very average number for first time credit card users, but this number can go up with a larger deposit. However, it all comes down to whatever you get approved for when you apply for a card.
How else do successful young credit card owners manage their credit? They pay their bills on time and in full. You don’t have to pay the bills in full all the time, but the more you pay off, the less it will rack up. Having a low balance to pay off will also keep that credit score high. Maxing out a credit card sounds glamorous until you realize it can be worse for your credit. Staying at around 30% of your limit is ideal.
Bottom line is this: be mindful of your capabilities and have a realistic conversation with yourself about what you need and what you are ready to take on. Some of the best life lessons are the ones we live through ourselves, but it never hurts to research on your own and make the best decision for your situation. Several card comparison sites exist for this very issue, like the one linked below for CompareCards.com.
Alyssa Frank is a senior at the University of Missouri School of Journalism