You always remember your first! Your first bike, baseball game, date, and view of a sunset. Your first credit card is a gateway and, with millions and millions of credit cards issued each year, the fact is that your first card, is likely the easiest you’ll ever attain.
“College kids have cards handed to them on a platter,” said Bettye J. Banks, of Consumer Credit Counseling Services in Dallas, Texas. CCCS is an affiliate of National Foundation for Credit Counseling in Silver Springs, Maryland. “It’s a free ride at that point.”
Books, tuition, payback of loans and “the college experience” can all be charged and, at the same time, be the source of credit building history for a lifetime. The ease, or lack thereof, of getting the loan for the house and car you buy down the road begins here.
“We live in a credit driven world,” said Ms. Banks. “To rent a car, a hotel room, or buy a plane ticket, you need plastic. You just need to understand that plastic can be explosive if you don’t use it wisely and well.” FICO scores, which change with almost every transaction, purchase or payment, are used by most lenders to determine risk and are assessed by the three credit bureaus Equifax, Experian, TransUnion. Each of the credit bureaus will provide, free of charge upon request, one credit report per year. The FICO score affects how much a lender is likely to loan and at what rate of interest.
Low interest rates, the cost of annual fees, and due date grace periods are all keys to look for when determining “your” card. “Rewards cards are a low priority for students because they aren’t spending enough to matter. Finding the cards with no annual fee, the lowest interest possible, and terms to meet their circumstances, is what students should be looking for. Credit unions often offer cards with terms that are typically better and they’ll often listen to the extenuating circumstances of a customer,” said Joe Ridout, spokesperson for Consumer Action, a San Francisco based non-profit organization offering education and advocacy since 1971.
“Students need to realize that credit follows you everywhere and that when you graduate from school, a good credit score is important,” said Mr. Ridout. “From the apartment owner who will check your credit to see you can pay your rent, to many employers and insurance companies, the list is long of those who will be looking at your history, as short as it may be.”
Credit cards that provide reward incentives, airline miles, hotel points, and others, are an opportunity for users to “earn free” gifts but it’s important to be sure that balances are paid off so that the “free” doesn’t end up costing you in the interest fees that are accrued. “Rewards cards are a low priority for students,” said Mr. Ridout. “But there are cards available to university and college students that will give rewards, or points, for good grades and for paying bills on time which can be used to pay down student loans. ‘Shopping’ for the right card, and listening to the terms of each situation, is very important.”
“I’m 18 and an adult.” Those calls are heard for, it seems, a lifetime and now, here you are. Realize that with that independence comes responsibility and credit built from the age of 18 belongs to you, and not your parents. Monies owed, and the credit scores created, belong to you and it’s your future. “It’s mastering the fundamentals and building a strong credit history that is important. It’s easy to make mistakes, and those mistakes, once reported, can stay on your history for up to seven years,” said Mr. Ridout. “Use your credit as a spending card, and spend the way you would pay for goods with cash, then pay it off at the end of each month.”
You’re a student. Educate yourself on the right cards for you.