Don’t Take All the Credit
I remember when I got my first “free” credit card application in the mail. That was an awesome day for a 19-year-old with a part-time job and full-time load of ASU classes.
“Free Visa card with a credit line of $500! No restrictions!” Woo hoo! Who cared about the several pages of fine print; I applied and soon had a $500 Visa card—and my parents didn’t know!
Though I made a personal vow to only use the card for emergencies, we all know how murky that world is and how easy it is to justify that something you want badly enough is an “emergency.” Also, maybe you are only able to work part time, or maybe you are involved in athletics, research or other activities that keep you from working at all. It doesn’t take too many food, gas, clothes, toiletries and other everyday purchases to run through a relatively small line of credit.
Another thing I discovered rather quickly—as soon as you get one credit card, everyone else wants to give you another one. Once my Visa card arrived, I was soon bombarded by applications for “free” credit cards from specific retailers like Dillard’s, Exxon, JC Penney, Shell, Old Navy and even Victoria’s Secret. There was a world of spending right at my fingertips!
Thankfully, I had the sense to not apply for any more cards, even when I charged up to my $500 Visa limit much faster than I thought I would. Since I could only work part time, even with just the one credit card, I struggled with that debt through the second half of my time at ASU.
Don’t get me wrong — having a credit card when you head off to college has become almost a necessity for today’s students. However, misuse of credit cards can easily lead to disaster.
Often, parents provide students with their first credit cards, a practice that allows parents to monitor spending and, if need be, help with payments. The main culprits that inspire misuse are the so-called “free” credit card applications that are mailed directly to students the minute they are accepted into college. Short-term payment deadlines and high interest rates for those types of cards can quickly add up to trouble in the form of growing debt and a ruined credit history before you’ve even graduated.
Here are some things to keep in mind:
- There is no such thing as “free” credit. You always have to pay it back.
- Whenever possible, pay more than the minimum monthly payment. If you don’t, it is easy to fall behind the interest rate and your balance will eventually begin to grow even when you aren’t charging anything.
- Store and gas credit cards often have the highest interest rates. General purchase cards like Visa, Mastercard and Discover are much more versatile and almost always have a lower interest rate than retailer cards.
- You should make sure your emergencies really are emergencies. Sometimes you may have to do without something you really want, but it is for the greater good.
- Having a credit card at a young age can be a good thing. If you use it properly, it can help you get through college much more comfortably, and you will already have a solid credit history when you graduate.
Credit cards are not evil, and they can be a valuable learning experience. Just be careful, get your priorities straight, and you should be fine.