Being a student is not easy. Now a days the expenses for a typical student are pretty high. Rising college tuition, expensive books, conveyance, laptop and other gizmos cost a lot of money. Above all, limited time to work and earn money strictly restricts our cash flow. Most of us can only afford to work full time in summer. Often the money earned through our summer jobs is not enough to sustain us throughout the year. So we are on a constant lookout for part time gigs and decent credit deals.
Having a credit card and using it with some discipline is really a boon. But most students don't realize the advantages due to their poor spending habits. I have personally used my student credit card to build my positive credit history and earn rewards. I'd not have gotten any cash-back if I were using cash to pay for my purchases. So that itself helped me save at least 1% on all my purchases.
In fact, building and maintaining good credit as a student is more important now than ever. As soon as we graduate we will need to rely on credit to finance important big-ticket purchases like a car, house, or higher education. The best part is that acing the student credit card game is not as hard as it seems. We simply need to keep the following four things in place:
1. Select your credit deal carefully
Usually most students sign up for their credit cards at their university's bank or credit card booths set up to welcome students at the start of a semester. Well they are not the only places to get student credit. We can also get some cool deals online. No matter where you sign up, it pays to read the fine print to determine the interest rate (APR) on your purchases, grace period for payments and annual fees (if any). I always chose cards with no annual fees, a thirty day grace period and low APR.
2. Live within your credit limit, never max it
This is the most fundamental principle of personal finance that we need to master for having success with money in life. Never spend more than your income. For credit cards, it's a good idea to limit our purchases to 30% of our maximum credit limit. Never max it.
If we max it or go overboard, it will have a negative impact on our credit history as well as score. And the worst part is that these transactions will show up on our credit history for 7 years. So we are stuck with negative things for a long time. Our lenders will make us pay through the nose by charging higher interest citing a poor credit score. Don't give them that chance.
3. Pay your credit card bills on time
The easiest way to get a good credit score is to pay our credit card bills on time. I have opted for e-statements and use automatic bill payment for paying my bills. It saves me the headache of having to remember when a bill is due. I also save money on stamp needed for mailing payments. So far I have never missed a payment. Also, it's environment friendly since it saves paper mailings.
If we forget to pay our credit card bill on time, we'd be charged a late payment fee. But the real damage is not in the extra money that we pay as late fees. Late payments show up in our credit history and knock down our credit score by several points. Not fun!
4. Check your credit report at least twice a year
To be successful at any venture we need to track our progress. I do that with my credit score by ordering credit reports from the three major bureaus, Experian, TransUnion and Equifax, twice a year. As US citizens we are entitled to one set of FREE credit reports from all the three bureaus once a year through annualcreditreport.com. I order my second annual credit report through Equifax's Score Watch. To save money on my purchase I use an equifax score watch promotion code. I usually cancel the service after a month's usage. So far this practice has held me in good stead.
If we stick to these four points, not only will we build a solid credit history but also jumpstart our personal finance at a young age. Having good money habits early on is a basic foundation for building good net worth later on in life. So the effort is definitely worth it!
Drop a line (comment) if you have any other credit tricks up your sleeve. Thanks in advance :).
Note: If you are ordering a 3-in-1 credit report from Equifax, use an equifax promotion code to save some bucks. I forgot to do that first couple of times. But later I saved at least $3 to $5 per purchase by using an equifax coupon. As a student, every dollar counts!
Having a credit card and using it with some discipline is really a boon. But most students don't realize the advantages due to their poor spending habits. I have personally used my student credit card to build my positive credit history and earn rewards. I'd not have gotten any cash-back if I were using cash to pay for my purchases. So that itself helped me save at least 1% on all my purchases.
In fact, building and maintaining good credit as a student is more important now than ever. As soon as we graduate we will need to rely on credit to finance important big-ticket purchases like a car, house, or higher education. The best part is that acing the student credit card game is not as hard as it seems. We simply need to keep the following four things in place:
1. Select your credit deal carefully
Usually most students sign up for their credit cards at their university's bank or credit card booths set up to welcome students at the start of a semester. Well they are not the only places to get student credit. We can also get some cool deals online. No matter where you sign up, it pays to read the fine print to determine the interest rate (APR) on your purchases, grace period for payments and annual fees (if any). I always chose cards with no annual fees, a thirty day grace period and low APR.
2. Live within your credit limit, never max it
This is the most fundamental principle of personal finance that we need to master for having success with money in life. Never spend more than your income. For credit cards, it's a good idea to limit our purchases to 30% of our maximum credit limit. Never max it.
If we max it or go overboard, it will have a negative impact on our credit history as well as score. And the worst part is that these transactions will show up on our credit history for 7 years. So we are stuck with negative things for a long time. Our lenders will make us pay through the nose by charging higher interest citing a poor credit score. Don't give them that chance.
3. Pay your credit card bills on time
The easiest way to get a good credit score is to pay our credit card bills on time. I have opted for e-statements and use automatic bill payment for paying my bills. It saves me the headache of having to remember when a bill is due. I also save money on stamp needed for mailing payments. So far I have never missed a payment. Also, it's environment friendly since it saves paper mailings.
If we forget to pay our credit card bill on time, we'd be charged a late payment fee. But the real damage is not in the extra money that we pay as late fees. Late payments show up in our credit history and knock down our credit score by several points. Not fun!
4. Check your credit report at least twice a year
To be successful at any venture we need to track our progress. I do that with my credit score by ordering credit reports from the three major bureaus, Experian, TransUnion and Equifax, twice a year. As US citizens we are entitled to one set of FREE credit reports from all the three bureaus once a year through annualcreditreport.com. I order my second annual credit report through Equifax's Score Watch. To save money on my purchase I use an equifax score watch promotion code. I usually cancel the service after a month's usage. So far this practice has held me in good stead.
If we stick to these four points, not only will we build a solid credit history but also jumpstart our personal finance at a young age. Having good money habits early on is a basic foundation for building good net worth later on in life. So the effort is definitely worth it!
Drop a line (comment) if you have any other credit tricks up your sleeve. Thanks in advance :).
Note: If you are ordering a 3-in-1 credit report from Equifax, use an equifax promotion code to save some bucks. I forgot to do that first couple of times. But later I saved at least $3 to $5 per purchase by using an equifax coupon. As a student, every dollar counts!
