If you are like me, you are constantly getting credit card offers that say things like, “0% Fixed APR,” “Cash Back on Groceries and Gas,” and “2.5% Interest.
The credit card companies seem to have a driving desire to get their claws into your finances early and keep hold till the end of never. I stayed away from them while in college. I could barely keep a balance in my bank account and knew that spending money I didn’t have with a credit card wasn’t the smartest idea.
But if you do have a credit card and are in college, then you have what is called, a College Card. It has a very high interest rate, which means that money is probably more expensive than what you are using it for.
Credit: What is it good for?
Now everyone knows that you need credit to exist in our world. The fastest way to earn good credit is to have a successful credit card, which you pay off regularly and use responsibly, as well as paying off your student loans and paying your bills on time, etc. This all adds up to that magical number that is the difference between having the ability to get a car, house, whatever with or without a co-signer. But what is a co-signer you ask? It is basically someone who guarantees your payments on a house, car, whatever and is usually someone who has much better credit than yourself, like your parents.
Back to Basics
But back to Credit Cards (Houses and Loans another day ). So what does a credit card do for all us new people? It is basically an amount of money that an agency has determined that you can spend without having the money secured in a bank account. That is the main difference between a debit card and a credit card.
With a credit card, you promise to pay the amount, which comes with that signature after the magic card slides through the reader, but do not have to pay for it at that moment.
I get a new credit card offer at least once a week. They all have amazing teasers and things that you think are great, but are they really? Here is a list of different tactics that suckered me in at first: Rotating Cash Back, 0% Interest for the first year, Automatic Acceptance etc. These are all things that appeal to a budding new graduate or honestly anyone else. But the main thing you have to do is look for those sneaky little words hidden in the explanation page of each card.
Read the fine print
Many cards have amazing promotions for the first month, six months, year, whatever. These are teasers. They are what get the unsuspecting graduate to sign up and get that amazing first credit card in their name. What you wouldn’t expect is all the harm that that innocent little piece of plastic can do if not paid. The bills add up, I promise you! They can go from innocent to impossible in the blink of an eye if you don’t pay attention. My suggestion is to read thoroughly and know exactly what you are getting yourself into. Take off the rose colored glasses and read that document like your whole degree depended on passing a test based on how well you knew your credit card.
Best Deals I’ve Seen So Far
But I honestly don’t mean to scare you all off from Credit Cards. There are some good ones out there. But the cards that typically come immediately are what we called College Cards above. They have a low limit and a very high interest rate for your payback options. I am always a fan of paying off my credit card bills in full as soon as I get it. It saves me the hassle of remembering that I have to make a minimum payment each month and also saves me money in the long run. I know that it basically defeats the purpose of having a credit card, but if you are just trying to build good credit, making a few small purchases each month and then paying them off promptly will do wonders for that magical number!
Personally, I currently have one card and am considering getting another. The best card I’ve seen thus far has been a Bank of America Visa Credit Card, which gives me constant Cash Back on Groceries (3%), Gas (2%), and Everything Else (1%). But who knows… I really am quite happy with the one I have, but I am always happy to build my credit score!