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Choosing a Credit Card

(continued from Choosing a Bank)...

Now that you are becoming more financially responsible, it is a good time to start building your credit for the future. Since creditors often target college students, you probably already receive pre-screened mail offers, but just like choosing a bank it is best not to jump at the first opportunity just because it seems convenient.

Keep in mind that due to recent legislation, it is much more difficult for people under 21 to obtain credit; however, having a qualified co-signor or proof of sufficient income to repay the debt will increase your chances. If you are able to obtain credit, follow these guidelines for using credit wisely to build your future without building debt.

CHOOSE A CREDIT CARD WISELY

Just like with a banking account, consider your individual needs and the services offered, not just the initial benefits and promos. Check the fees and interest rates and compare them to other card offers. Student credit cards are particularly appealing because they tend to have no annual fees, low interest rates, and low credit limits. Although a department store card may seem like a good idea to receive discounts, interest rates on store cards can be as high as 20 percent. Not to mention, the temptation to shop and stray from your monthly budget will increase if you have credit at your favorite store.

STICK TO ONE CREDIT CARD

This is the best way to properly manage your credit and be sure you don’t incur debt you can’t pay back.

ONLY CHARGE WHAT YOU CAN AFFORD TO PAY

This is another method to be sure you don’t incur credit card debt you can’t pay back. By doing this, you will be able to pay your balance in full each month, so that $10 pizza doesn’t turn into a $15 or $20 pizza after interest.

DO NOT EXCEED YOUR CREDIT LIMIT

In fact you should limit your spending to a maximum of 30 percent of your credit limit. This will help you avoid debt as well as costly over-the-limit fees.

DON’T BE TEMPTED BY CASH ADVANCES

Once many budget-restricted college students hear they can use their credit card to get cash, they immediately take advantage. However, cash advances are often associated with high interest rates and fees. If you are turning to your credit card for cash, this may be a sign of a bigger financial problem.

(continue on to Scholarships)...

American Consumer Credit Counseling (ACCC) provides nonprofit credit counseling, debt relief, and debt elimination services for consumers nationwide. We offer free credit counseling to help consumers identify the right debt reduction program or debt solution for their unique situation. Since 1991, our certified credit counselors have helped thousands of individuals and families learn how to pay off a credit card balance and how to get out of debt fast through programs designed to payoff credit card debt within five years. Our debt management programs consolidate card credit debt payments and help reduce interest rates and finances charges, reducing the time it takes for getting rid of debt. And we offer comprehensive financial education services where consumers can get answers to questions like "How do I create a budget?", "What is debt consolidation?" and "How can I avoid debt in the future?"

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