Credit Tips for College Students and Recent Graduates

Turning 18 is the start of a lot of good things – graduating high school, becoming a legal adult, going to college, and the ability to get a credit card. Young adults, those in college and out, have to be careful about getting and using cards. How you use plastic in your younger years will have a big impact on your future cash flow and ability to borrow money.

Don’t get a credit card right away. Though you are legally able to get a card once you turn 18, you shouldn’t be in a rush to get a new piece of plastic in your wallet. Even if you don’t get a card now, you can still get one in a few years. Being patient about your first card lets you pick the right one and avoid many of the mistakes your peers will make.

Only get a card if you have a job. Watching your parents and others use cards may have given you the impression that credit is like free money. But, that’s not how it works. Once you make a purchase on your card, you’re required to pay it back by making at least a minimum payment (set by your card issuer) every month. Because you’re obligated to make that monthly payment, you need a steady stream of income, from a job rather than your parents.

Don’t rely on your parents to pay your credit card bill. You are the best person to make sure your credit card bill gets paid on time every month. Your parents may forget or they could have money problems of their own that cause them to miss your credit card payment. Because it’s your credit and not theirs, you’ll be the one on the hook for catching up on your payment and paying the late fees.

Your credit card history will follow you for a long time. When you have a credit card, your credit card issuer will report your credit history to a business known as a credit bureau. The credit bureau collects credit information for all consumers and sells that information to banks and other businesses that request it. These businesses that review your credit report are checking to be sure you’ve handled your credit responsibly. When you’re irresponsible with your credit card, it will come back to haunt you in the future.

Select a credit card wisely. Not every credit card is created the same and how a credit card looks is the least of your concerns. What’s more important is how much the credit card costs – the annual fee, interest rate, and other fees that you’ll be charged. The lower the interest rate the better – it means you won’t pay high finance charges on balances you don’t pay off immediately. No annual fee is best, for student credit cards at least. Take some time to review and compare credit card offers before you decide which credit card to get.