10 answers
Grace
Student
Calgary, Alberta, Canada
4
Questions
Asked
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What's some thing I should be aware and tips for having a credit card?
I'm a student, and I found that when I apply to certain universities or workshops it requires a credit card to apply. Since credit and loans are a fairly new topic for me, what are some things I should look out for and what are the benefits? #student #credit
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10 answers
Doc Frick
Career Coach and Mentor
1348
Answers
California, CA
Updated
Doc’s Answer
Grace your first credit card can be a step toward building a strong financial future and establishing an excellent credit score—or it can lead to a mountain of debt you struggle to repay for years. Before using your first credit card, here are some tips to guide you along the right path.
SET BUDGET – A credit card is a convenient way to make purchases and earn rewards, but it shouldn’t be used to buy things you can’t afford. Having a realistic idea of the amount you can spend and pay off at the end of the month will keep you from getting in over your head. Try using a budget like the 50/30/20 method, which suggests spending 50% of your take-home pay on necessities like housing and groceries, 30% or less on items you want but don’t need, and 20% or more on savings and paying off debt. That will help keep your credit card spending in line with your income and other saving and spending priorities.
TRACK YOUR PURCHASES – Calculating the amount you can afford to spend is the first step. After that, be diligent about tracking your purchases throughout the month, potentially with the help of your credit card’s mobile app or website. Once you’ve met your monthly spending limit, avoid using the card until you’ve paid off the balance. This kind of discipline helps you build a good credit score and keeps you out of credit card debt.
SET-UP AUTO PAYMENTS – It can take time to get used to paying a bill each month. Protect yourself from late credit card bills by scheduling automatic payments ahead of your due date. Be sure the scheduled payment is more than the minimum payment—ideally, for your full balance—and that you have enough funds in your checking account before the payment is scheduled. Otherwise, you may be charged a late fee or a returned payment fee. Paying on time is also important because payment history is the biggest contributor to your credit score, the three-digit number that lenders use to evaluate your credit usage. Aim to pay every single credit card bill on time to keep your score strong. Your credit card payment will be due on the same date each month, which makes it easy to keep up with your payment due date.
LESS IS MORE – It can be tempting to max out your credit card—that is, charge up to your credit limit—but it’s crucial not to. Credit utilization, or how much of your credit limit you’re using, is the second biggest contributor to your credit score. That means running up a large credit card balance, and carrying it from month to month, can hurt your score. Plus, it can set the foundation for getting into credit card debt that can take a long time to pay off.
CHECK YOUR STATEMENT REGULARLY – Each month your credit card issuer will send a statement that details your transactions from the previous billing cycle. Reading your billing statement is important even if you’ve scheduled your monthly payment. You should review your statement to catch errors or unauthorized charges. If you spot either of these, report them to your credit card issuer immediately to be cleared up. Most credit cards come with a $0 liability guarantee, meaning you won’t be held responsible for fraudulent charges. But you could lose that guarantee if you don’t report the errors immediately. The law states you could have to cover up to $50 in unauthorized charges, depending on how long you wait to report them.
If you create an online account or download the card’s mobile app, you can check your transactions in real time and spot errors much sooner. You can even set up alerts that may help you catch suspicious activity right away.
Hope this was Helpful Grace
SET BUDGET – A credit card is a convenient way to make purchases and earn rewards, but it shouldn’t be used to buy things you can’t afford. Having a realistic idea of the amount you can spend and pay off at the end of the month will keep you from getting in over your head. Try using a budget like the 50/30/20 method, which suggests spending 50% of your take-home pay on necessities like housing and groceries, 30% or less on items you want but don’t need, and 20% or more on savings and paying off debt. That will help keep your credit card spending in line with your income and other saving and spending priorities.
TRACK YOUR PURCHASES – Calculating the amount you can afford to spend is the first step. After that, be diligent about tracking your purchases throughout the month, potentially with the help of your credit card’s mobile app or website. Once you’ve met your monthly spending limit, avoid using the card until you’ve paid off the balance. This kind of discipline helps you build a good credit score and keeps you out of credit card debt.
SET-UP AUTO PAYMENTS – It can take time to get used to paying a bill each month. Protect yourself from late credit card bills by scheduling automatic payments ahead of your due date. Be sure the scheduled payment is more than the minimum payment—ideally, for your full balance—and that you have enough funds in your checking account before the payment is scheduled. Otherwise, you may be charged a late fee or a returned payment fee. Paying on time is also important because payment history is the biggest contributor to your credit score, the three-digit number that lenders use to evaluate your credit usage. Aim to pay every single credit card bill on time to keep your score strong. Your credit card payment will be due on the same date each month, which makes it easy to keep up with your payment due date.
LESS IS MORE – It can be tempting to max out your credit card—that is, charge up to your credit limit—but it’s crucial not to. Credit utilization, or how much of your credit limit you’re using, is the second biggest contributor to your credit score. That means running up a large credit card balance, and carrying it from month to month, can hurt your score. Plus, it can set the foundation for getting into credit card debt that can take a long time to pay off.
CHECK YOUR STATEMENT REGULARLY – Each month your credit card issuer will send a statement that details your transactions from the previous billing cycle. Reading your billing statement is important even if you’ve scheduled your monthly payment. You should review your statement to catch errors or unauthorized charges. If you spot either of these, report them to your credit card issuer immediately to be cleared up. Most credit cards come with a $0 liability guarantee, meaning you won’t be held responsible for fraudulent charges. But you could lose that guarantee if you don’t report the errors immediately. The law states you could have to cover up to $50 in unauthorized charges, depending on how long you wait to report them.
If you create an online account or download the card’s mobile app, you can check your transactions in real time and spot errors much sooner. You can even set up alerts that may help you catch suspicious activity right away.
Hope this was Helpful Grace
Thank You Dhairya. “The broadest, and maybe the most meaningful definition of volunteering: Doing more than you have to because you want to, in a cause you consider good. ” – Ivan Scheier
Doc Frick
Fatima Jalloh
4
Answers
Updated
Fatima’s Answer
When looking at credit cards definitely look at the reward the cards have to offer. Cards that match cash back are a good benefit. Also look the interest rate. Some cards have extremely high ones and you’ll end up spending a ton of money on interest. Sign up for an account with credit karma so you know where exactly you credit score is at the moment. They offer care recommendations based on your score. That way you don’t just apply for a lot of cards with out knowing your chance or approval. Hard inquires on your credit lowers your score
Kellen Bergs
Investment Analytics Intern
11
Answers
Minneapolis, Minnesota
Updated
Kellen’s Answer
Hi Grace, great question! Google is your friend, especially when starting college. When I first started looking for my first credit card, I googled "Best credit cards for college students" or "Best starter cards". This will give you a great list of cards with low credit requirements, no annual fees, low APR, and some have great rewards. Make sure to look for all of these features. Especially when you are just starting out and trying to build credit, you do not want to be paying a ton for fees or anything like that so these options for young people are great. Start out by charging just a small amount on your card each month and paying it off right away. This will build your credit score and increase your limit (the amount that you are allowed to spend on your card). From there you will be able to graduate to better/additional cards!
Dhairya Dalal
AI Research Scientist @ Posh Technologies
104
Answers
Boston, Massachusetts
Updated
Dhairya’s Answer
Look for credit cards that have no fees. Some will have shiny rewards (cash back, airline mileage, etc) but also charge anywhere from 50 to 500 dollars a year for those perks. You would need a high volume of spending to make those rewards worth it which is unlikely for a college students. Look for the cards that offer rewards with no annual fees. Rewards that give cash back or double points around commons purchases like groceries and gas are usually pretty good as they are complimentary to your normal purchases.
Pay close attention to the interest rate and their policy of late fees and minimum payments. Never pay the minimum amount unless you're in a situation where you can't pay the full bill because you'll be charged interest (often at excessive rates often near 18 -24%). People often accrue credit card debt because they fail to make payments or think they can get by paying the minimum. However this results in your debt snowballing with interest. Also try to avoid taking out cash advances against your credit limit. Again the interest on those advances are very expensive.
That being said, a credit card is one of the primary ways way to build up credit. Budget ahead and makes sure you make purchase you can afford. I often encourage folks to use credits as opposed to cash where they can responsibly to build up a credit history. Use your credit in lieu of your debit card where you can. You'll have more protections against fraud and theft with a credit card. Debit cards leave your bank account exposed and if you have fraudulent charges against your debit card, it's much harder to recover. Card cards also have other perks folks forgot like purchase warranties, travel insurance for cancelled flights, and free credit reporting. Keep those in mind too.
Pay close attention to the interest rate and their policy of late fees and minimum payments. Never pay the minimum amount unless you're in a situation where you can't pay the full bill because you'll be charged interest (often at excessive rates often near 18 -24%). People often accrue credit card debt because they fail to make payments or think they can get by paying the minimum. However this results in your debt snowballing with interest. Also try to avoid taking out cash advances against your credit limit. Again the interest on those advances are very expensive.
That being said, a credit card is one of the primary ways way to build up credit. Budget ahead and makes sure you make purchase you can afford. I often encourage folks to use credits as opposed to cash where they can responsibly to build up a credit history. Use your credit in lieu of your debit card where you can. You'll have more protections against fraud and theft with a credit card. Debit cards leave your bank account exposed and if you have fraudulent charges against your debit card, it's much harder to recover. Card cards also have other perks folks forgot like purchase warranties, travel insurance for cancelled flights, and free credit reporting. Keep those in mind too.
Scott Foster
Consulting
31
Answers
San Francisco, California
Updated
Scott’s Answer
A few of the fundamental things include: Don't spend more than you have. Make payment on time. Don't open too many at once. Understand credit utilization. Get annual credit report for free to monitor accounts (annualcreditreport.com). Find a card with a good rewards program (Chase or Amex are usually the best).
Nova Fitzmaurice
Financial Analyst
3
Answers
Round Rock, Texas
Updated
Nova’s Answer
Hello Grace!
Kick-starting your credit journey early can pave the way for a prosperous financial future. From my personal experience, the most effective way to build credit is by obtaining a beginner's credit card. Being a college student can be an added advantage for credit card approvals, but remember, some might require a more extensive credit history. I suggest exploring options like the Discover IT student card or the Capital One Savor One Student Cash Rewards card, which are specifically designed for students. Additionally, your parents or other adult family members can assist you by adding you as an authorized user on their credit card - you don't even need to use it!
During the application process, you'll need to provide your social security number or other personal identification details for verification. Once approved, you'll have the option to accept or decline the credit card. If you accept, you'll likely start with a low credit limit, which is the maximum amount you can spend. It's crucial to use your credit card wisely. A golden rule to follow is to never spend more than what you have in your bank account or cash. This ensures you can repay your debts promptly and avoid interest charges. Certain credit cards, like the Discover card, offer a 0% interest rate for the first year, meaning you won't be charged extra for maintaining a balance on your credit card. Your statement balance, the total amount spent during a specific period, should be fully paid off by the due date to avoid interest charges. By keeping a close eye on your spending, living within your means, and clearing your statement balance monthly, you'll reap the benefits of having a credit card.
However, certain actions can negatively impact your credit. Leaving a balance on your card can result in additional interest charges. Missed or late payments can also harm your credit score. With cards like Discover, there's a low minimum payment (typically around $35), which is the least you need to pay towards your credit card statement each month. It's also a good practice to utilize no more than 30% of your total credit limit. For example, if your limit is $500, aim to spend no more than $150.
Lastly, you'll have access to your spending statistics and your FICO credit score, a valuable tool that provides an approximate monthly update of your credit score. It also highlights factors contributing to or detracting from your score, enabling you to make necessary adjustments for a better credit score. Establishing good credit is essential for future financial endeavors like securing loans for a car or a mortgage. It can also be a determining factor in rental application approvals. Credit cards often come with perks such as cash back and reward points, which can be redeemed for various benefits. I personally use my cash back to reduce my credit card balance, but you can also exchange it for gift cards or transfer it to your bank account. Some credit cards offer points or "miles" that can be used for free or discounted flights!
Best wishes on your credit journey!
Kick-starting your credit journey early can pave the way for a prosperous financial future. From my personal experience, the most effective way to build credit is by obtaining a beginner's credit card. Being a college student can be an added advantage for credit card approvals, but remember, some might require a more extensive credit history. I suggest exploring options like the Discover IT student card or the Capital One Savor One Student Cash Rewards card, which are specifically designed for students. Additionally, your parents or other adult family members can assist you by adding you as an authorized user on their credit card - you don't even need to use it!
During the application process, you'll need to provide your social security number or other personal identification details for verification. Once approved, you'll have the option to accept or decline the credit card. If you accept, you'll likely start with a low credit limit, which is the maximum amount you can spend. It's crucial to use your credit card wisely. A golden rule to follow is to never spend more than what you have in your bank account or cash. This ensures you can repay your debts promptly and avoid interest charges. Certain credit cards, like the Discover card, offer a 0% interest rate for the first year, meaning you won't be charged extra for maintaining a balance on your credit card. Your statement balance, the total amount spent during a specific period, should be fully paid off by the due date to avoid interest charges. By keeping a close eye on your spending, living within your means, and clearing your statement balance monthly, you'll reap the benefits of having a credit card.
However, certain actions can negatively impact your credit. Leaving a balance on your card can result in additional interest charges. Missed or late payments can also harm your credit score. With cards like Discover, there's a low minimum payment (typically around $35), which is the least you need to pay towards your credit card statement each month. It's also a good practice to utilize no more than 30% of your total credit limit. For example, if your limit is $500, aim to spend no more than $150.
Lastly, you'll have access to your spending statistics and your FICO credit score, a valuable tool that provides an approximate monthly update of your credit score. It also highlights factors contributing to or detracting from your score, enabling you to make necessary adjustments for a better credit score. Establishing good credit is essential for future financial endeavors like securing loans for a car or a mortgage. It can also be a determining factor in rental application approvals. Credit cards often come with perks such as cash back and reward points, which can be redeemed for various benefits. I personally use my cash back to reduce my credit card balance, but you can also exchange it for gift cards or transfer it to your bank account. Some credit cards offer points or "miles" that can be used for free or discounted flights!
Best wishes on your credit journey!
Andrew Kaul
4
Answers
Updated
Andrew’s Answer
Personally, my first credit card did not have any rewards/perks attached to it, but it also did not have any fees and relatively lower interest rates if I missed a payment. If you do like to look around and buy a lot of things, maybe going with a card like this would help, because sometimes having a card with cashback and perk options promote and justify unneeded spending ("well i'll get some cash back so its okay to buy this"). However, if you believe that you can control your spending habits, then definitely shop around with rewards and interest rates on different cards. Talking with an adviser at your bank may help clear some questions or concerns you may have about the different types of cards available.
Alison Warren
Academic Administration
57
Answers
Boston, Massachusetts
Updated
Alison’s Answer
Hi Grace,
You’ve gotten some fantastic advice already! But, I will also pass on to you what my mother told me about getting my first card:
If you can’t already afford the thing you want to buy with the card, do not use the card to buy it.
When you’re starting out building your credit, it’s extremely important that you do not go into debt. Every month, you want to be able to pay off whatever you charge on your card that month. The more you can do this, the higher your credit score will go, and the more benefits you’ll be able to enjoy later in adulthood with good credit!
You’ve gotten some fantastic advice already! But, I will also pass on to you what my mother told me about getting my first card:
If you can’t already afford the thing you want to buy with the card, do not use the card to buy it.
When you’re starting out building your credit, it’s extremely important that you do not go into debt. Every month, you want to be able to pay off whatever you charge on your card that month. The more you can do this, the higher your credit score will go, and the more benefits you’ll be able to enjoy later in adulthood with good credit!
Steve Swisher
Procurement / Supply Chain Category Manager
35
Answers
The Woodlands, Texas
Updated
Steve’s Answer
Get your credit card early in life at your local bank. Your parents can assist you to get started, even guarantee a small amount (say $500) for a new credit line in your own name. Then buy a few small items, and pay your bill early (before the due date). Repeat this over and over for several months and then the consumer credit firms (like Experian) will start to create a FICO credit score for you. This will improve over time and then voila you have "Credit".
Allison Brown
Financial Analyst Intern
4
Answers
Saint Paul, Minnesota
Updated
Allison’s Answer
One thing I would suggest is to check the APR so that you don't have to pay high interest. I would also check if there's an annual payment. I would also suggest to look for cards that apply to your spending routine. There are cards that offer rewards given back for travel, groceries, gas and etc.
When making payments every month be sure pay off your full balance every month. Some also split their balance of the month and make two payments to cover their full balance. This is viewed as making more payments on your card, and it can help benefit you in the long run.
When making payments every month be sure pay off your full balance every month. Some also split their balance of the month and make two payments to cover their full balance. This is viewed as making more payments on your card, and it can help benefit you in the long run.