MyCredit Card

You will most likely need a credit card while you are in college for traveling, car rentals, movie rentals, identification, online purchases, and to build on your credit report. Therefore, a clear understanding of credit card usage and terms will be important, as well as getting the right type of credit card. Once you have a card use it wisely, as a bad credit report will negatively impact you for years. Here are some basic guidelines for evaluating credit needs and to stay debt free.

Have as few cards as possible; one that is paid off each month should be enough for a college student. However, you may have reason to have more than one, a gas card perhaps, that offers a service or discount from which you benefit.

Only apply for the card you want. Multiple applications and open cards, even if there is no balance, can have a negative impact on your credit report.

Pay your bill, if full, when you get it, interest can continue to accrue day by day. Do not be late; late fees are ridiculously high and costly to you. Some cards actually change or increase your interest rate every time you are late with a payment especially if you signed up for a low rate or introductory rate offer. If you cannot pay your bill in full, do not pay less than the minimum payment by the due date. Continue to make payments as you are able through the month, you do not have to wait for the next bill to make additional payments.

If you cannot pay your bill on time or have a dispute, contact the card company immediately and in writing as they can often provide assistance and may be willing to waive a fee or charge.

If you have problems, organizations such as Consumer Credit Counseling Services, 1-800-388-2227, may be able to help.

Choosing a Credit Card

You should select your credit card, it should not select you. If you are receiving offers in the mail or on campus, it will not hurt to read them as they may contain information on what offer is best for you. When selecting a card you will want to consider the following factors:

Interest Rate – This is the percentage (%) rate you will pay to borrow money. There is generally no interest charged if you pay your bill in full and on time each month. The credit card company reserves the right to change the rate with a 15 day notice.

Annual Fee – This is a flat fee that is charged to have a card issued to you. Evaluate what the fee covers or offers to you, is it mileage, cash back, or some other value added service, if there is none, then you should insist on having the fee waived or find a card that does not charge such a fee while you are in college.

Grace Period – The number of days you have to pay off your credit card without interest fees being added. Each card company is different so it is important to know this date and pay your bill in full and on time each month.

Types of Cards

Fixed Rate – The interest rate is fixed for the life of the card.

Variable Rate – The interest rate is generally fixed for specific periods of time, and then adjusts, based on your repayment history Or a specific time period. There is usually a minimum and maximum rate associated with the card.

Secured – Only for those who need to repair their credit or who have been denied a fixed or variable rate card for lack of credit. Deposits are required and a percentage of the deposit is generally paid for use of the card. While costly, it may be a worthwhile investment if you need to build or repair credit and to have a credit card to obtain those items/services requiring one while in school.

Retail Cards – Often offer you a discount on purchases for their establishment only. These are not a necessity while in college.

Credit card rates can be compared at www.creditcards.com.