Question: Is it wise for me to have a credit card in college?
LGFCU Financial Advisor: Establishing a credit history is important for young adults. The question is, what kind of story will that history tell? If you’re a college student and you’re at least 18 years old there are many reasons why you might choose to have a credit card. If you intend to have a credit card during college, smart choices and responsible behaviors are a must. Protect you credit profile by doing the following:
- Don’t use your credit card for impulse purchases; this is one way that credit balances pile up.
- Only charge what you can afford to pay when your monthly statement arrives. Even if you don’t meet this goal, you will have at least the awareness of the need to control credit spending.
- Think of your credit card as an emergency source of funds for essential expenses. Sure, you may use your card frivolously at some point, but leave it at home when you anticipate situations where you could make poor decisions.
- If you carry a balance, keep it below 25 percent of your available credit line. Credit rating agencies like you to have a low credit balance that you can pay off easily.
- Don’t use your credit card for expensive cash advances. These often come with higher interest rates and additional fees.
- Pay your credit card bill on time, every month. No piece of your credit history is more important.
- Don’t complete additional credit card applications. One card is enough. Applying for credit results in inquiries to your credit record, which will negatively affect your overall credit rating.
Your use of credit now will affect your cost of using credit in the future. It might be hard to imagine, but your behavior in using credit in 2014 and 2015 will impact your application for an automobile loan or a home mortgage in 2020. Credit cards are not for children; they are for responsible adults. Let discipline, moderation and timeliness protect your credit future.