Wednesday, August 22, 2012

Back to School Finances: Managing Credit Cards with Care


The Credit Card Act of 2009, signed by President Obama, makes it difficult for anyone under 21 to get a credit card. You now must have verifiable income or a co-signer.

It’s still possible to have a credit card while in college, and it’s not necessarily a bad thing unless used incorrectly.

Here are some tips on how to build good credit and use credit cards wisely.

  1. Know your credit card’s Annual Percentage Rate (APR). Read the fine print of any credit card you sign up for and know the APR. The higher the APR, the more you will pay if you don’t pay off your balance each month.
  2. Pay off your balance each month. Avoid getting in over your head by paying off the balance each month. Minimum payments may look attractive, but if you only pay the minimum each month you’ll pay a lot more for the original item.
  3. Look for annual fees. You’re a college student with limited money. If your credit card has an annual fee, you’ll want to know about it.
  4. Only charge what you can afford to pay. Many people use credit cards to buy things they can’t afford. Change your mindset. If you can’t afford it, don’t charge it.
  5. Think twice before signing up for gimmick credit cards. Many department stores and airlines offer credit cards with nice perks. Only you can determine if the perks outweigh the terms of the credit card. Again, look for APR and annual fees.
Tomorrow, I'll share some financial tips I wish I knew while I was in college. If you have any tips, feel free to share them with me at Jeremy.Lushene@dfi.wa.gov