by Kaili Xu

 

Credit cards can be a great thing -- they are convenient, boost your credit rating and are useful in emergencies. Many students get credit cards when they are in college, as soon as they are old enough to qualify. However, as so many Americans have learned, credit cards are only advantageous if used correctly. It's no secret that excessive credit card debt is one of the biggest problems in today's society.

These tips will help keep you from falling in to a credit card nightmare.

Shop around for a good deal.  Compare credit cards and choose the lowest interest rates when signing up. Look for a credit card with an annual percentage rate (APR) of 15% or lower and without annual fees.

Use credit wisely.  Use your credit card carefully. It's a good idea to have a credit card on hand for emergencies and necessities. Never rely on credit cards for day-to-day expenses like food and entertainment or, even worse, tuition. It could be very tempting to employ the plastic for trivial purposes, but that can add up to a huge balance unnoticeably and amazingly fast. 

Pay off balances in full each month.  The single most important rule about wise credit card use is this: pay the full amount, just as if it were any other bill, like rent or utilities. Companies keep the minimum monthly payment low so that you'll extend your payment over time and rack up additional debt in interest. If you must carry a balance from time to time, pay as much as you can. If you can only make the minimum payment each month, you are in debt over your head. Put the plastic away and use cash until you pay the entire balance off.

Always pay on time.  This is essential. Make your payments as early as possible every month (at least seven to ten days before it is due) to avoid late charges. And, many credit cards jack up your interest rate to 29% if you are late a few times. Finally, late payments damage your credit record, and your credit score will suffer for the next seven years! As a college student, your credit card may be the only thing on your credit report, so that one mistake could affect your ability to buy a car or house later on.

Call your credit card company and ask for a lower interest rate.  It's cheaper for a credit card company to keep a customer than find a new one, so if you think that your interest rate is too high, call the number on your card and ask for a lower one. While you're on the phone, ask them to reduce your credit limit so you can't charge anything else on the card.

Don't get cash advances.  They are expensive cash options. Typically, cash advances come with a much higher interest rate, require you to pay transaction fees, and come with no grace period. The moment you take a cash advance, you start paying interest on that balance, which means even if you pay the entire balance in full each month, you still pay interest.

Have only one or two credit cards.  Applying for too many credit cards is a common mistake among college students. One or two cards are enough to meet a student's needs, according to experts' advice. If you only have to keep track of one or two cards, it is much easier to make sure you pay each on time, remember which card has the lowest rate, and save you from making a mistake that will affect your credit history. If you have to use one card to pay off the balance of another, you are in trouble.

Keep good records.  Keep all credit card receipts and reconcile them with your statement each month. Review the statements carefully to make sure there are no inaccuracies or fraudulent activity. To limit your liability, you must detect and deal with these immediately.