Become a credit card shark: Five tips for managing credit in college

Imagine you’re shopping online for back-to-school shoes when you spy an amazing pair of Nikes. They’re your favorite color, they have the perfect amount of traction and they only cost… $145. Whoa. Now you have a real dilemma on your hands. You don’t get your paycheck for another three weeks and even then you won’t have room in your budget to swing a purchase. You decide to bite the bullet and use your credit card to buy the shoes. After all, that’s what credit cards are for, right?

Unfortunately, that’s not the case. Credit cards might make paying bills more convenient, but they should never become a way to pay for things you can’t afford.

Many college students seem to fall prey to credit card debt, however. According to a 2016 survey of recent college graduates, nearly 30% of students had an average balance of $2,573 in credit card debt.

So, before you think about using your credit card next time, check out these five tips for staying credit savvy and debt free:

1. Don’t be fooled by tempting credit card offers. Some credit card companies will use deceiving credit card terms, shopping discounts or free coupons to convince students to fill out an application. As enticing as these offers may be, recognize them as the easy marketing tactics they are. When shopping for credit cards, be sure to compare interest rates and fees before making a final decision. Check out our College Handbook for a list of things to look for when choosing a credit card.

2. Be wary of the number of credit cards you take out. Every time you apply for a credit card, your credit score takes a major hit. It also makes it harder to track the cards you are using. The more cards you have, the more likely you are to miss payments and collect debt.

3. Pay your balance in full every month. One of the best ways to stay on top of credit card debt is to pay off the balance as soon as you get the bill. If you only make the minimum payment, you could end up paying hundreds of dollars in interest each year. Save yourself some cash in the future and pay off your balance sooner rather than later.

4. If you got it, flaunt it. Using a credit card responsibly helps improve your credit score and gives future lenders a reason to trust you. Your employer may even check your credit score before giving you a job offer as a test of your reliability. So why not build a credit history you can be proud of? Pay your credit card bills on time and in full.

5. If necessary, close the account. Although closing a credit card account can damage your credit score, it may actually benefit an irresponsible card owner. If you’re having trouble keeping up with payments or can’t seem to stick to your credit limit, pay off the debt and close the account. Closing your account now probably won’t damage your credit history nearly as much as going into credit default.

Credit cards can be a useful tool for making payments and helping you gain responsibility, but your financial success depends on your ability to make wise credit decisions and minimize debt.