College Rules – getting your first credit card

Your first day of college is such an exciting time. Meeting new people, rushing around from class to class and signing up for as many fun organizations that you can find, are all part of the college experience. But another part of college often involves starting your financial path and there’s always temptation to apply for a credit card. Before making the decision to apply for a credit card, ask yourself a few simple questions.

What is the interest rate? Some credit cards offer rates as low as 12% APR, but a lot of rates for first time card holders can soar into the high 20’s.

Can I make the payment each month? Get one credit card and pay off the balance each month. It’s best to pay off the full amount when the bill is due, but if you can only pay the minimum amount, be prepared to pay a very expensive finance charge. Letting a balance accrue over time not only wastes your money with all of the interests and finance charges, it can also be stressful knowing that you are responsible for paying off huge debt. And with high balances, your credit score can take a downturn. You’ll quickly find yourself in a mountain of bills with no source for paying them all off.

Am I responsible enough to handle this right now? If you are a full time student, you’re probably not working too much. Not working usually means no money. Always keep in mind that, when you use your credit card to make purchases, you will have to pay the amount back! So, don’t go crazy and keep the shopping within reason.

Does the card you’re applying for have any extra incentives? Get rewarded for the things you buy. Most credit card companies now offer point incentives for cash back, free gas or other gifts. Be sure that the card you choose gives you something back.

Although getting that first initial Visa or MasterCard can essentially build your credit, be prepared to follow a strict path to ensure that you don’t stumble into a credit card trap. Stay smart, stick to a plan and you’re sure to be heading down the right financial path!