The Smart Student's Guide to Managing Credit Cards

If you have recently received a credit card or are in the process of getting one, arm yourself with the knowledge that will allow you to make smart credit-related choices. You need information that will enable you to establish a positive credit history so you don’t become overwhelmed with mounting debt. Be sure you know the credit card lingo and fully understand the terms and conditions of the credit card contract you sign. The information below will help get you started:

• Credit cards allow you to pay for items by borrowing against your line of credit in order to make new purchases. Each month you’re billed for the balance of however much you’ve borrowed. Try to pay your balance in full each month to avoid paying interest on the charges you have made.
• Cash advances provide a loan from the amount available on your line of credit. Avoid taking out cash advances—and the interest and fees that will accompany them—and rely on your bank's ATM using your debit card instead.
• Balance transfers allow you to transfer part or all of a balance due on a money or credit account to another account held at a different financial institution. If you are looking to consolidate debt, be sure to do your research and find the account offering the lowest interest rate available. Also, double-check that you will not have to pay additional transfer fees.

Smart Credit Card Tips:

The following guidelines will help you select and manage your credit card responsibly:

1. Choose your credit card; don’t let your credit card choose you. Just because you receive a credit card offer in the mail, or a free gift for signing up on site, that does not mean you need to apply. Take the time to seek out cards that offer low interest rates, a low credit limit, and no annual fee.
2. Avoid signing up for multiple cards. You probably don’t need more than one credit card as a student. Find the best terms and stick to that one credit card. Every new credit card application means a drop in your credit score, so only apply for one card. Multiple credit cards mean multiple balances that you will need to pay each month, and balances can add up quickly.
3. Read the terms and conditions before signing the contract. Be sure to read the fine print before signing. Make sure you fully understand the repayment terms, giving special attention to the following: the “grace period,” the interest rate and whether it will fluctuate, the annual fee, and possible charges you’ll incur for cash advances and other transactions.
4. Read the mail your credit card company sends. Card providers are required to give you a 45-day notice of any rate increases.
5. Opt to have a fixed credit limit that you cannot exceed. Having too much credit available to you may result in your spending more than you can afford to pay back.
6. Only charge what you can afford to pay back. If you can’t afford to repay the balance each month, hold back on using the card.
7. Pay off your balance each month. If you make only the minimum payment instead, you’ll be stuck with years of payments and interest charges that continue to pile up.
8. Never co-sign for a friend’s credit card. If your friend can’t afford to get a card on his or her own, or is not old enough to do so, chances are that person probably shouldn’t have a credit card right now. Co-signing for friends makes you responsible for repaying their personal debts if they can’t—or decide they won’t—make the payments.
9. Opt out of prescreened credit card offers that come in the mail. You can stop unsolicited credit card offers for a full five years by visiting www.optoutprescreen.com or calling the Consumer Credit Reporting Industry's "opt-out" number at 888-567- 8688 and following the voice prompts.
10. Protect your identity. Be sure to shred credit card statements—or better yet, go paperless and view them online. To help avoid credit card fraud, give your card information only to reputable businesses that you trust.
11. Pay your bill on time. Add a monthly reminder on your phone, computer, or calendar that will alert you a few days before your payment is due so you can avoid late fees.
12. Report lost or stolen credit cards promptly. If you think your credit card has been lost or stolen, report it right away. It’s a good idea to make photocopies of the front and back of each of your credit cards and store them in a safe place. That way, you’ll have the information on hand to help expedite the reporting process if theft occurs.
13. Make a plan to pay off large balances. If the excitement of having a credit card has already gotten you over your head in debt, calculate how long it will take you to pay off your large balance to get debt free .

Ultimately, you want to use credit responsibly . Your first choice always should be to pay as you go, using cash or check. When unexpected costs arise, however, it’s helpful to have a low-interest credit card available as a backup.