College expenses can be a lot. Most college students are not working to earn enough to pay their bills. With parents’ having other responsibilities to foot, you have to find a way to stay afloat by paying and settling your bills.
Credit card companies are willing to lend you a helping hand. They give you cards charged with a certain amount that you can use to settle your bills. Most people use these credit cards when they can pay the card companies back.
How do Credit Cards Work?
You will, first of all, need to open a credit card account. There are various credit card companies you can choose from. Pick the one that shots you.
The company will then give you a card with a credit limit. At the end of an agreed period, the company sends you a statement of how much credit you have accrued on the card within the period. You are expected to pay back within a stipulated period.
Usually, once you make a payment within the agreed period, you will not accrue interest. However, when you default on payment, interest accrues based on the company’s terms. Using your card and making your credit card payments on time ensures you have a good credit score.
When your credit score drops, you must try to fix it as soon as possible. Several professional credit repair companies can help you fix it. You do not have to worry about the expenses because certain companies offer cheap credit repair, so you do not have to spend much to fix it.
Difference Between Credit Cards and Debit Cards
Although the two may seem similar, there are specific differences. The main difference is that a credit card is more or less like a debt to the company. A debit card, on the other hand, is directly linked to your account. Any transaction you make using your debit card is automatically charged from your account.
How Credit Cards Affect Your Credit Score
Did you know that your credit card directly affects your credit score?
The activities on your credit card are tracked by lenders to determine your credit score. They check to see if you are creditworthy or not. Those who pay back the amount due on their cards at the right time are most likely eligible for loans.
Those who do not pay back their loans and interest on time will likely have their loan request turned down. Having a credit card also boosts your chances of accessing higher loan facilities once you have a good credit score.
Here are some tips to help college students properly use their credit cards.
Read the Terms and Conditions Carefully
This has to be the first tip you should know before applying for a credit card. Terms and conditions are the guidelines of the company you are requesting a card from. It also serves as an agreement between you and the issuer. It contains the fees, interest rates, annual percentage rates, rewards, etc.
You will need to go through this carefully to know what you are getting into. If you notice in the terms and conditions that the company’s interest rate is more than you can afford, check with another company to see if their rates are better. Also, the terms and conditions give you an insider’s view on whether or not the company provides rewards.
You also determine how to qualify for such rewards from the terms and conditions. Once you have signed an agreement, these terms and conditions bind you.
Use Your Card Wisely
Once you have your credit card, you might be tempted to use it as you wish. Technically, you are allowed to use it as you will. It is, however, best that you use it wisely so you don’t max out your cards on things you do not need.
When you are constantly maxing out your card, you risk having a bad credit score. You should also know that when you make this a habit, you risk accruing a credit card balance that you might be unable to pay. The less you spend, the less balance and interest you accrue.
Always Pay Up Your Balance
At the end of the month, your credit company sends you a statement of your monthly expenditures. Always go through the statement they send carefully. Going through it carefully helps you in the following ways
- You will be able to detect any fraud going on with your credit card. When you spot an error or fraud on your card, quickly contact the issuing company so it can be resolved.
- It will help you track your expenses. This will enable you to make adjustments where needed to your expenditure.
You can choose to schedule your payment even before you receive the statement. However, if you plan to make your payment, make sure you make the payment on time. Timely payment ensures you get an excellent credit score.
Timely payment does not only ensure you have the perfect credit score; it helps you avoid extra fees. Late payment attracts late fees and interests, which you should try to avoid. You can set up an automatic payment from your checking account to your credit card account. This way, once it is the scheduled date, if you have sufficient funds, your credit is automatically settled.
Use Your rewards
If your card has a reward feature, try to understand how it works and use it. There are usually spending categories that boost your rewards. Using your card to pay at a restaurant or gas station is a way to boost your rewards. Ensure that you use your rewards before they expire.
Work Towards Improving Your Credit Score
You need to ensure your credit score is always high so you can access loans and mortgages. A good credit score is considered within the range of 300-850; sure, your score remains within that range. If, however, you have made some bad financial decisions and your credit score has dropped, you can still fix it.
There are specific steps you can take to fix it yourself. The best option, however, is to get credit repair professionals to fix it for you.
Conclusion
Using a credit card can be either a blessing or a curse to you. This depends on how you use your card. At the same time, the tips we have given are geared toward helping you make the most of your card while ensuring you maintain a good credit score.
