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. Choosing a credit card must be done after careful consideration.
Tips for Choosing a Credit Card
1. Choose it Wisely
Just like with a banking account, consider your individual needs and the services offered. Make sure you look beyond initial benefits and promos. Check the fees and interest rates and compare them to other card offers. If you are still a student, credit card offers are particularly appealing because they tend to have no annual fees, have 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.
2. Limit the Number of Credit Cards
This is the best way to properly manage your credit and be sure you don’t incur debt you can’t pay back. It can seem trendy to pay by your credit card. However, in the midst of it all, it is easy to forget how difficult it is to manage credit card debt. Therefore, pick one credit card to start!
3. Charge What You Can Afford
It is important that you pay your balance in full each month. Paying off the balance ensures you don’t incur credit card debt you can’t pay back. This way your $10 pizza doesn’t turn into a $15 or $20 pizza after interest. 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. Use your credit card to the benefit of your future personal finances. Ensure you avoid the pitfalls and manage your personal credit card debt.
4. Stay Away from Cash Advances
Once many budget-restricted Millennials 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.
If you are seeking credit card debt advice, speak with a certified counselor at American Consumer Credit Counseling by calling 800-769-3571.