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Credit Cards 101 For College Students

Posted by Julian Rivas on June 26, 2018

Credit cards are a vital financial tool in a college student’s wallet. Unfortunately, a lot of students don’t learn credit card basics before they apply for a credit card.  According to a U.S News Survey, 44 percent of student respondents said they weren’t educated on credit card use, and over one-third of those surveyed had no clue what their credit score was.

Having a lack of understanding around student credit card usage is concerning, especially when damaging your credit could make it difficult to get an apartment, secure a car loan or even land a job. We’ve put together a few things you should consider before solidifying your decision to get a credit card.

Start Early

Getting a credit card while in high school or college may be a way to build good habits. Starting off with a low limit credit card will help you build your credit early on. A good starting point is to use your credit card for small bills like Netflix or a gym membership to ensure payments will be made. Utilizing these suggestions can help you keep your credit utilization rate right where you want it and ultimately help you build up a strong credit score for the future.

Build a Budget

If you don’t know the basics of building a budget, you’re most likely not ready for a credit card. Creating a budget is often helpful for college students, especially if they’re paying for everything out of pocket. It should track what money is coming in and what’s going out; such as income, scholarships, rent, utilities, textbooks and more. Once the budget is established, it will make it easier to add your credit card bills into the budget to ensure a payment is never missed.

Smart Credit Card Use

Having a credit card as a college student can be dangerous, especially if you’re cash-strapped, which is usually the case for most college students. Consider the following tips to avoid getting into substantial debt.

  • Avoid overspending: Look for credit cards with small credit limits.
  • Don’t get too many credit cards: Stick to one credit card and focus on improving the credit limit for that card instead of opening multiple credit card accounts.
  • Find credit cards with low-interest rates: Try sites like or to compare different cards and ensure you’re getting the best deal
  • Don’t max it out: Your credit utilization rate is a measure of how much credit you utilize – aim to cap your utilization at 30% of your credit limit as a higher rate could potentially harm your credit.

Leave it at Home

When you get your very first credit card, it may be tempting to use it for everything. Splurging can cause a real dent in your credit if you don’t have the funds to back up your purchases. Leaving it at home instead of in your wallet will help you avoid impulse purchases when going out. To limit yourself even further, simply take out a certain amount of cash before heading out so you’re restricted to that quantity.

College students who use credit cards without doing the appropriate research first can potentially drag down their credit score for years to come. That’s not to say you should avoid credit cards at all costs – as long as you know how to use them correctly, credit cards can be a powerful financial tool. Hopefully, these suggestions will help you get on the right track. Don’t forget to check out our blog on how to protect yourself from identify theft.


Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see MoneyKey's Terms of Use.

Posted in: Financial Tips

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