Wednesday, January 11, 2006

In college and don't have a credit card? You need one:

If, for some crazy reason, you have made it to or through college without a credit card, I applaud you! I do not think I know any college student that does not have a credit card. The problem is, if you ever want to buy a house, or a car, or anything that will require you to take out a loan, you need to have some credit history. Without a credit card, it is very hard to have a credit history.

Let's set a few ground rules before you apply for a credit card:

1. NEVER, EVER, apply for an in-store credit card. The interest rates a way too high, and you can only use them at one store or chain.
2. If you won't be able to pay your balance in full at the end of the month, don't use the card!
3. Once you get your first card, don't cancel it! Keeping a card for a long time helps your credit score tremendously.

Okay so now it's time to apply for a card. Ask your parents what cards they use and like. Find out what your friends are using for cards. Go to your current bank and find out if they have a card.

When you apply make sure you tell them that you are in college, most companies will throw credit cards at you if you are a college student. Second, check the interest rate! Not just the introductory rate, the actual rate you will pay after the introductory period expires. This should be 15% at most. Some places will give you an instant decision about your application, others will take time, and call you to verify information before they process it.

Once you get your first credit card make sure you follow these easy rules:

1. Don't carry it with you everywhere! Only bring it with you once or twice a month, that way you aren't tempted to use it.
2. Don't buy things that you use up quickly with it, such as food, movie tickets, ect. These things are gone before you even get the bill. If you can't afford them, don't buy them!
3. Pay off most of it every month. Carrying a small balance ($75 or less) shows lenders that you are able to handle carrying some amount of debt.
4. Don't say "Oh I will just pay it off next month." Next month turns into the next month and then it ends up being a year and your card is maxed out. If you start to get in trouble over using your card, ask your parents or someone you trust to take it and hide it so you stop using it and pay it off.

You have taken one step towards financial freedom!


At 12:47 PM, Blogger kcarknee said...

Mike--I wish I had all this advice before! :)


At 11:45 AM, Blogger fatguy_poolshark said...

ok so im in college and currently unemployed... however i do not have a cc ive applied for several cc for students and been denied on all of them... the part thats bugging me is i have no credit history...non i have ntohing bad nor good.... and back when i was trying to get one to build credit i hada job from high school on through college making over 2000 a month and still getting denied... any thoughts on what the issue was?

At 4:14 PM, Blogger Mike said...

Hey there-

It's kind of like being stuck between a rock and a hard place, you want to get a credit card to build credit, but you need credit to get a credit card in most cases. I got a card a few days after I turned 18 through providian, you can visit them at (I am not associated with them at all, but both my friend and I who had no credit history were able to get credit cards through them). The downside is the interest rate is high on this card, I think around 19%, so you in no way want to leave a balance on it.

If you don't have a job, I think it would be wise to aviod getting a credit card right now. I got stuck in the trap when I got laid off last year and racked up a lot more debt than I had anticipated. There are usually plenty of work study jobs available at school, or look for one at a local pizza shop or something similar.

At 4:14 PM, Blogger Mike said...

Also --- Please visit the new site!

Thanks -- Mike


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