Getting a first credit card without the debt

By Anisha D. Seals
The Collegian

Many people seem to acquire a large amount of debt in college.

Tuition and books alone can put a dent in a person’s pocket, not to mention living expenses and other spending habits one may have.

Credit cards have helped students pay for the major college expenses, but have created the debt they may be in for years.

For those who have managed to get by without a credit card, here are some tips for when you’re ready to manage one in the future.

There are three things that students should be aware of while in search of their first credit card, said K.C. Chen, department chair of finance and business law. Students should pay attention to that the credit card’s limit, interest rate and their own personal spending limit, he said.

The point that Chen stresses is to know your own limit. Some students get stuck with a credit card with a reasonable limit and sky-high interest rates. With that type of card, students must budget themselves or they will spiral into debt.

“Every student should know what they have,” Chen said. “Monitor your accounts on a weekly basis.”

Chen also advises students to actually read through their personal statements because you never know if any of the regulations have changed or if you were charged incorrectly.

Paying the full amount of your card within 30 days is also a great way to keep your credit in check, Chen said.

When students don’t set a personal limit and they realize they can not afford the payments, they tend to only pay the minimum balance. By constantly doing this, there is still a balance left to be paid that has interest tacked onto it which leaves the student with more to pay in the end.

Elizabeth Steinke, a lecturer in the department of finance and business law, has a totally different set of things that students should look for, though. She stresses that fees and rates are two aspects of a credit card that can keep students in debt if they’re not aware of them.

Students need to educate themselves on annual percentage rates, finance charges and annual fees or late payment fees.

Some companies use “teaser” rates to draw people in. Some teaser rates such as “Zero percent interest rate for six months!” get students signed up quickly because it seems appealing at the time.

Steinke said that instead of being coaxed by that type of statement, students should ask questions such as “How long will these rates be in effect?” and “What are the annual fees, late fees and finance charges?”

One way late fees can be issued is if the bill is mailed or posted online late. To avoid this, Steinke says to make sure that the bill is mailed a few days in advance. If it’s done online, pay it a few days in advance because processing may take a few days.

After thoroughly researching the options, Steinke said that the best way to build and maintain good credit is to use only one card and use it responsibly because you want to obtain a good credit score.

“Do not put anything on the card that you can not pay for at the end of the month,” she said.

When you begin to notice that you can balance the credit card well, negotiations with rates can also be done.

If there happens to be a high rate on the credit card you chose, some companies will allow the rate to be decreased, but they will only allow this if they notice that you show financial stability.

When you’re prepared to build your credit just remember “Only use it if you’ve got it.”

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