Your First College Credit Card

Now that you are going to be a college freshman, it might be a good idea to start building good credit. A good way to do this is get a credit card, but be careful.

Picking the right credit card

Some university and alumni associations will send you to credit card companies that will smother you with offers and spam mail. These cards are not always the best choice. They may start with a low interest rate and then after a few months the rates will skyrocket

Do some research and find out which cards will work best for you. Don’t get suckered in by rewards programs and low introductory rates. You want a card that does not charge application fees or annual fees. You also need it to have a decent interest rate (15%-18% is normal) and most importantly it must report to all three credit bureaus (Equifax, Experian and TransUnion).

Now that you have your card

Don’t take cash advances. They come with very high interest rates that apply immediately. If you need cash, this is not the way to get it.

Don’t pay late. Not only will you be assessed a late fee, but you could get a higher interest rate for the future. If you completely skip a payment, your credit score will go off the deep end. One skipped payment could even drop your credit score by 100 points. This is not the type of hit you want to take, and it could take quite some time to rebuild.

Don’t get too close to you’re credit limit. If you charge too much your credit score can take a hit. This is especially so if you go above 80% of your limit. So be careful, the less you charge the better.

Do set up automatic payments. Life can get crazy when you’re in college and it’s not uncommon to forget to do things. Most credit card companies can arrange to have your monthly balance taken directly from your checking account. Make sure you set a reminder every month to ensure that there is enough money in your checking account to pay off your balance.