Getting a student debit card during college days is not as easy as it seems. But, if you manage to get one, the credit card will help you to create good spending habits as well as build an early credit score. Additionally, if you learn to use your credit cards from the early days of college, you’ll be able to qualify for better cards in the future, purchase a home, or get a car loan.
However, you have to be disciplined while using your credit card. Many people don’t spend wisely after getting a card. Hence, they end up with massive debts which ultimately decrease their credit scores.
When you learn to manage your student credit card, you’ll be able to keep your credit scores and finances on track. In this article, we will discuss the top 4 tips that you help you to utilize your student credit card.
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Pay Your Credit Card Bill Timely
Many students increase their expenses after getting a credit card and end up delaying the credit card bill payment. Don’t forget that credit cards will help you to establish a positive credit history. However, if you don’t pay your credit card bills on time, you’ll have to face severe consequences. One of the biggest factors in your credit scores is the payment history. Hence, you should prioritize paying the bills before the due date arrives. You can also set up automatic payments. That system will help you to avoid any missing bills. Apart from that, it can minimize the negative impacts on your credit scores.
Don’t Increase Your Expenses Tremendously
It’s not difficult to get carried away by the benefits and rewards of a credit card. Credit card runs on “buy now, pay later” methods that are extremely alluring. Whether you’re going to a movie or a fine restaurant, you may want to pay through your credit card. You may also think that you would pay all those charges once you graduate and get a high-paying job.
However, keep in mind that the interest rate on a credit card is extremely high. This means that if you carry a significant balance month after month, it can lead to debt of thousands of dollars that are hard to pay. If you don’t want to fall into this trap, charge only what you’re capable of paying. Once you reach your limit, don’t touch the credit card. But you don’t need to worry about the interest as long as you’re a student. As per the Balance, the average interest rate on a student credit card is the lowest.
Keep the Utilization Low
Even if you become careful paying your Legacy Visa Card bill on time, if you arrive too close to your credit limit, it will negatively affect your credit score. As per experts, the percentage of the available credit, also known as the credit utilization ratio must be kept under 30%.
For instance, if your credit has a credit limit of $20,000, you need to maintain at least 30% of the whole credit limit that is $6,000.
If you want to track your expenses, set a balance alert that will remind you of your remaining balance.
Annual fees are worth paying only if the credit card offers rewards or other additional benefits. Remember that the amount of annual fees depends on the cards. However, as you’re new on the credit journey, it’s advised to avoid paying the annual fee if possible.
Many credit card companies charge $0 annual fees for student credit cards. So, you need to research before applying for a student credit card.
These are the top 4 tips to maintain your student credit card. Remember that a credit score is extremely important if you want to purchase a new home or take a car loan. So, it’s your responsibility to maintain a good credit score. Paying the charges promptly will help you to achieve this.