Credit Card Basics
- If you must have a national credit card, choose only one.
- Choose a credit card with a low credit limit until you know how to manage your spending and can pay the balances in full each month. Note: Credit card companies who increase your credit limit are not doing you a favor--they want you to spend more money so they can make more money on interest.
- Low introductory interest rates change. When choosing a credit card, make sure to compare fees, after intro interest rates, and other hidden costs.
- Create a monthly budget based on how much income you have available from student aid, employment, allowances from parents, etc. Also list your expenses. Be realistic. Then stick to your budget to prevent overspending and credit card use.
- Practice delayed gratification. Do you really need those new jeans, or do you just want them? If you have to use a credit card to buy them, is it worth the interest you will pay?
- Pay monthly balances on time and in full to avoid finance charges. If you cannot pay in full, at least pay more than the minimum.
- If your credit card company offers to let you skip a payment, do not do it. You will end up paying a finance charge on the balance.
- Applying for and using store credit cards can also get you into financial trouble. If you have a national credit card, you do not need a store credit card to make purchases. Also remember that each additional credit card you have is another "hit" on your credit report.
- If spending does become an issue, cut up your credit card, call the credit card company, and cancel your account. Then concentrate on paying the balance.
- Request a copy of your free credit report on a yearly basis from the three nationwide consumer credit bureaus at annualcreditreport.com.
