Financial literacy is seldom taught. It is a form of learning that accumulates with experience. That is why managing credit cards for students can become a slippery slope. A trial and error approach in this regard can be anti-climatic. You have to possess a certain level of understanding regarding student credit cards before you start using them. Unwise utilization of credit cards can create long-term debts. So, be wise in making your choices. In this blog, we’ll discuss some of the key steps that’ll help you avoid some of the common mistakes you can make while using acredit card for students.
The choice of a credit card can have far-reaching consequences in your college life. When the choices are far and wide, it seems natural to fall for the luxury of multiple credit cards. However, having more than what you need opens the avenues for financial mismanagement. It can also launch you into debt traps, from which the escape can be daunting. Hence, it is essential for you to choose your credit cards wisely.
Pre-approved credits of huge sums can be tantalising for college students. However, it tends to create needs that doesn’t exist in the first place and compound their liability columns. Despite the reforms of CARD act of 2009, the marketing mavericks of financial institutions targeting students haven’t drawn to a close. Credit cards for students are still widely marketed. You can still manage to get multiple credit cards from your early college years. However, it is better to limit your credit card usage to a selected few cards. Limiting your credit card number, in turn, obviates unnecessary spending practices and keeps your financial hygiene checked.
Track Your Bills
Most of us are driven by the law of least effort. Hardly any of us would like to keep track of our bills on a regular basis. However, spending without conscious thinking is similar to cutting the very branch of the tree one is sitting on. Consciousness would strike us only when it becomes too late. It is thus important to have a thorough tracking of our expenses whenever we flip our credit cards way too often.
With the rampant usage of credit cards for students, untracked bills can cause huge financial distress. It even leads to default payments and can impact your credit scores. Thus, devise a proper plan to manage your finances. Tracking your bills also helps you follow healthy financial practices, which leads to proper financial hygiene in the long run.
Determine the Who’s and Why’s of Spending
Having a credit card for students is not enough. You should be wary of the Who’s and Why’s of Spending. College students have the habit of sharing things with their friends. However, a credit card is one of the possessions that need to be used with utmost caution. You have to think thrice before blindly sharing your credit cards. It is because there can be chances of losing the credit card or bearing a very high balance from purchases.
Analysing the why’s of using your credit cards is equally crucial. As financial spending is self-taught, eliminating unnecessary spending is pivotal. Having a credit card with an extended spending limit doesn’t mean you should utilise it to the fullest. Instead, you should prioritise your credit card usage and avoid trivial spending.
Make Sure You Have A Stable Income Source
Credit cards for students can have higher risks compared to the credit cards used by working professionals. It is because working professionals have a fixed source of income. Their credit limits are also proportional to their income levels. For students using credit cards, the probability of a secure job in the near future can be one of the major driving factors. However, in this modern era of financial setbacks and massive layoffs, getting a secure job can be challenging. Therefore, piling on your credit card debts without a proper financial plan can be highly risky.
If you are a college student planning toapply for credit card, prioritise your finances. Managing your expenses and tracking your bills are equally important while utilising credit cards. So make sure you research properly and make use of these tips to avoid mistakes while using credit cards.