Be Responsible

Enjoy the benefits, know the pitfalls.
The season for credit cards

There are many things you can expect to see on campus move-in day at your new college – station wagons, tired parents and nervous freshmen are among them. You can also expect to see representatives from numerous credit card banks offering you hats, T-shirts and other gifts in exchange for filling out a credit card application. Before you sign on, there are a few things you should think about.

Know what you’re getting into.

Although it may not always seem like it, when you spend with a credit card you are spending real money. In addition, you pay interest on the money you spend. And the interest rates on credit cards are higher than interest rates for conventional loans. Combine high spending with these high interest rates, and you’ll watch your debt grow quickly. For this reason, many individuals use credit cards for their convenience, but pay off their entire balance when they receive the bill each month. That means you won’t end up spending money you don’t have.

Think about your future.

If you find it necessary to pay less than the full amount you owe on your credit card each month, make sure you have a plan for paying off your debt. Whether it’s through a summer job, or a full time job after graduation, make sure you can make enough to manage your debt. In addition, it’s incredibly important that you pay your bill – even if it’s only the minimum payment – on time each month. All of your transactions with credit card companies are recorded. When you apply for a car loan or a mortgage, it’s very likely that potential creditors will find out about every late or missed payment. This information may affect your ability to obtain a loan. Learn more about how to stay out of credit trouble.

Maintain your budget

Just because you have a credit card doesn’t mean you shouldn’t keep yourself to a strict budget. Set goals for spending and keep careful track of your expenditures to ensure you’re meeting your goals. Credit card purchases should be included in your list of expenditures. Find more information about creating a budget.

Know the benefits

We have no intention of convincing you NOT to open up a credit card account. In fact, there are many reasons you should. Credit cards are great for emergency situations, especially when you’re on vacation or away at school. They are accepted almost anywhere throughout the country, and increasingly, the world. And, used responsibly, they can help you establish the solid credit rating now that you’ll need later on. However, it’s important that while you’re taking advantage of the benefits of the credit card account, you remain aware of the risks and do your best to avoid them.

Give it a try

Once you’re sure you understand the consequences of opening a credit card account, do research on the best credit card for you.