Using your student credit card this holiday is not entirely a bad idea. In fact, paying with a credit card can be a smart way to make holiday shopping convenient and hassle-free. It all depends on how you use the card and you pay off your charges. On this post, we will focus on tips on how you can manage your student credit card smartly this year:
Set your own spending limit. If your student credit card allows you to charge up to $500 a month, it’s best to set your own spending limit, which is at least 50% lower than the actual limit. Student cardholders are often provided with a much lower limit than regular cardholders so you could quickly max out your credit if you are not aware of your charges.
Make a list of things that you plan to pay with your credit card and keep it separate from the things you want to pay in cash. For each item, jot down your estimated price and calculate the total cost of your purchases. Creating a list will give you a clear view as to how much you’ll end up paying for so you can avoid splurges or going over the budget.
Pay off your full balance. Some students pay only the minimum due that their credit card requires but such a strategy only increases the risk of debt build-up. The best way to handle credit card debt is to pay off your monthly charges in full.
Are you having second thoughts whether or not you can pay your full balance this month? In this case, you might be better off paying cash than using your credit card. Keep in mind that carrying a balance in your account will cost you additional interest rate charges each month until you’re able to zero in your balance.
Review your billing statement. If you used your student credit card, carefully check your statement of account to make sure that there are no incorrect charges. If you notice unfamiliar transactions in your bill, do not hesitate to call up your issuer to dispute those charges.
Does your student credit card offer liability protection? Some cards provide $0 liability protection so you don’t need to pay a single cent for unauthorized charges. Review the terms and conditions of your student credit card so you can be reminded of your privileges and limits as a cardholder.
Keep your charges minimal. You need to be more cautious when using your student credit card for payment. By keeping your charges as minimal as possible, you can minimize the risk of bad debt. It will be much easier for you to pay off your balance in full and you can save money by avoiding interest rate charges and late fees.
More importantly, students must keep in mind that all their account activities will reflect on their personal credit reports. Therefore, managing your student credit card responsibly will help you build and maintain good credit history and score.
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About the Author:
Samantha Wilson is a consultant for student bad credit cards. For years she has written student credit card reviews that would help build student credits.