We’ve all come to that point when we’re standing in line to get coffee and reach into our wallets, only to find that it’s empty. You have the money to buy something but you just don’t have it with you. This is where a credit card can come in handy. These days, many young people freeze up when they hear the phrase “credit card.” The automatic association that the tiny square piece of plastic comes with big, scary adult responsibilities. But credit cards can help students grow financially independent and understand that the tiny square piece of plastic is not that hard to manage and does come with some perks as well.
Designed for students over the age of 18, student credit cards help students build up their credit history and reap some possible incentives through available rewards programs. Now, two big question come to mind: What is good credit and how on Earth is a student going to earn it? Here are three easy steps on the best way to build credit with student credit cards:
Start Early to Build Credit With A Student Credit Card
There is a technical term called “piggybacking” in which children build credit off of their parents. The logic is simple. If the parents’ credit score is good, and the child has an authorized credit score on their parents account, the child’s credit score gets better. Piggybacking used to be a great way to get your credit started, but with the credit bureaus tightening down on how they come up with their scores it can be less of a factor today. It still can’t hurt to become an authorized user on your parents account and even if you don’t earn any points with the credit bureau, you learn some responsibility in the process.
Then, when it comes time to picking out your own credit card, you’ll know what research to do in finding a card that has the most benefits for you. In addition, you’ll now understand what credit is and how to build good credit with a credit card.
Spend Wisely With Student Credit Cards
Using the credit card for small, occasional purchases (i.e. lunch, groceries) makes it less of a shock when you have to pay off your credit card bill at the end of the month. Keep track of your spending, don’t risk taking on debt you can’t pay off quickly. Just don’t bury your student credit card in a treasure chest and not use it all. Otherwise, the bank may deem it inactive and your card won’t be helping you at all. Paying all your bills on time is a huge part of owning a credit card. Monthly pay-offs are highly recommended to avoid wasting money on interest charges. And remember, help is always available: Most student credit cards offer online tools to help keep track of and manage your credit, along with 24/7 support if you need to contact them.
Steer Clear of Giveaways
Once you’ve got the card in your wallet, it’s pretty important that you keep in safe, not only in its physical form but in its virtual form as well. When you’re shopping online, make sure you know what you’re buying, whom you’re buying it from, and that you get confirmation of your purchase. Identity theft is, unfortunately, quite common so be wary when you’re asked to put down your credit card and personal information.
These three smart moves can help students build credit and keep their credit scores stable, no matter what situation they’re in. In the long run, credit cards are important in life and by starting to build credit in high school or college, you’ll be on track for a good to excellent credit score when you need to open your own back account, take out loans for college, or fill out a renters application.