One of the challenging aspect of credit when it comes to the student population is the sheer availability of it. Students are seemingly bombarded with credit cards and other credit opportunities from the moment they turn 18. With so much access to what may seem to them like "free money," it is important to teach them responsible use of credit early. This will alleviate credit and debt management issues down the road.
Learn How To Pull -- And Read -- Your Credit Report
Not only is this a good way to learn how to manage the credit you do have responsibly, but also it allows you to monitor your report for false information or identity theft. You can get one free report per year from the Annual Credit Report website. You can also order one -- for a fee -- from one of the three major credit reporting agencies, which are Equifax, Experian and TransUnion. Once you pull a copy, if you see something on there in error, report it to the credit agency right away; mistakes on your report can drag down your credit score and cost you credit opportunities.
Beware Of Credit Card Traps
Credit cards that cater to students do so with traps to make the credit seem easily accessible and usable. They will make you think that you "need" their card and try to attract you with freebies to sign up, as well as brightly-colored cards that may be associated with your favorite celebrity. Don't fall prey to these traps and choose the card that best fits your financial profile, instead of the one that looks the prettiest. Pay close attention to any sign-up or annual fees before you sign up for a credit card so you don't get stuck paying for a card you can't afford to have.
Pay Attention To APR
Students new to credit generally don't understand the importance of a low annual percentage rate (APR). However, this is an important number because it dictates how much money you will pay back for things you purchase on credit. Your APR is the difference between paying $20 for a pair of shoes if you pay the bill off in the month or $50 if you take three months to pay the bill. Don't get duped by those companies that offer you a lower APR to sign up, and then suddenly -- and without warning -- raise your interest rate.
Determine Your Reason For The Card
Decide why you need the credit card. If you want to use it to pay for tuition or living expenses, don't do it. This is not the right use of credit and can land you in debt quickly. If you can't pay off your balance in full each month, then the purchase is not a good idea, unless you've planned ahead for a big purchase on which you have a timeline to pay off.
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