10 steps for students who want to handle credit wisely
Always remember that credit is a loan. It's real money that you
must repay. Before you apply for the first card, decide what
the card will be used for -- Emergencies only? School supplies?
-- and determine how the monthly bills will be paid.
Go slowly. Get one card with a low limit and use it responsibly
before you even consider getting another.
Shop around for the best deal. Try Bankrate.com's most recent survey
of student credit cards.
Study your card agreement closely, and always
read the fine-print flyers enclosed with every bill. Credit
card offers differ substantially, and the issuer usually can change
the terms at will with 15 days' notice.
5. Try to pay
off your total balance each month. Just paying
the minimum is a trap: If you try to pay off a $1,000 debt on
an 18 percent card by just paying the minimum each month, it would
take more than 12 years to repay.
pay on time. A single slip-up will place a black mark on your
credit record -- and could cause the card issuer to jack up your
interest rate to the max.
Set a budget, follow it closely and watch how much you're paying
on credit. A good rule of thumb is to keep your debt payments below
10 percent of your net income after taxes. So if you take home $750
a month, spend no more than $75 a month on credit.
in touch with your issuer by notifying the company promptly
when you move. In the event you must be late on a payment,
call before it's late. Card companies want your business for life,
so they may be willing to make alternate payment arrangements that
won't leave a mark on your credit rating.
accounts you aren't using. Having available-but-unused credit
can count against you when it comes time to buy a car. That's because
lenders don't like it when you have the ability to quickly go deep
the first sign of credit danger, such as using one card to pay off
another, make the card harder to use. Only carry it when you plan
to use it, lock it up in an inaccessible place or entrust it to
-- Updated: Sept. 26, 2003