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If you’re in college, you might be thinking about getting a credit card. After all, college is a time many students take on new responsibilities. Let’s take a look at why college students might benefit from having a credit card and how to choose one and use it responsibly.
Credit cards can help you build the credit history you need to begin an independent life. When you rent an apartment, get your own mobile phone plan, apply for a car loan, or in some cases apply for a job, your credit score will be checked. Part of building a good credit score is consistently paying back small amounts of credit on-time.
If you overspend on your credit card and cannot make your monthly payments, you risk getting into debt and hurting your credit score. It’s a risk to take seriously — a 2019 survey by financial companies EVERGI and AIG showed that over a third of U.S. college students have more than $1,000 in credit card debt and 15% of students had already hurt their credit scores through late credit card payments.
Stop by your local branch anytime to chat with a Personal Financial Representative and learn more.
Once you’re ready for your first credit card, there are several ways to go about it. Federal law puts restrictions on how someone under 21 years old can obtain a credit card, but you might find that these conditions help you dip your toe into the pool of financial responsibility without getting too overwhelmed. If you are at least 18 years old, you can apply for your own credit card if you can show you have the income to cover minimum monthly payments or if a parent or guardian will co-sign for you and be responsible for your unpaid debt. If you have a co-signor, they have to agree to any credit limit increases. Your parents could also make you an authorized user of one of their credit cards; they’ll be able to see any purchase you make and can quickly help you adjust your spending if you get in over your head.
Do your research when choosing a credit card, and consider these most basic features when you’re just getting started:
Try to always make your payments in full and on-time. Consider these tips to help manage your spending:
If emergencies or a slip up in your spending does put you in debt, it can be overwhelming to know how to pay it off, especially if you have student loans to repay, too. The best way to get back out of debt is to make a plan, prioritizing the most expensive debt (which is often the credit card) and including a date that is your personal deadline for being debt free. The nonprofit American Consumer Credit Counseling suggests budgeting 5% of your income as a general guide for paying down debt.
Take advantage of tools, resources, and guidance that can help you take control of your financial health. UFCU offers free online resources, seminars, and the opportunity to connect with a professional.
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