Using a credit card in college is essential in building early credit history. The earlier you start, the more impressive your credit history would be. But good credit history will largely depend on how well you manage debt and credit. Unfortunately, many college students had to graduate with extremely large debts in their credit card accounts. As a result, they are stuck in bad debt even before they get hired for their first job. Such ordeal can be avoided by using your credit card with care. Listed below are tips on how to manage a credit card before and after college graduation.
Before You Graduate
If you are still in college, watch your spending. Use your student credit card only for important purchases. Never charge anything to your credit card if you did not plan to buy in the first place. If you don't have cash, then skip the purchase. Impulsive buying is one of the top reasons why many credit cardholders fall into the debt trap.
Beyond College Graduation
What if you already have credit card debt? First, you need to stop incurring new charges. If you must use a credit card to keep the account from automatically closing, use it for a very small purchase and pay your full balance right away.
You may consider consolidating your credit card debt into a single account by acquiring a balance transfer credit card with zero interest. This way, you can concentrate on paying off your debts without worrying about the monthly rate.
Choose a zero rate balance transfer credit card that offers a sufficient length of time for you to completely pay your debts at zero rate. Most balance transfer cards offer only six months of zero interest, but you can find some issuers that offer 0% APR for up to 12 months or even longer.
Watch out for the balance transfer fees. You might be charged a certain percentage of the amount you are transferring each time you make the transfer. If you choose the wrong card, you could end up paying a large sum of money on balance transfer fees alone.
You also need to plan your repayment. Since you will be looking for employment, you might need to ask for financial help from your parents at least until you get hired. While in search of a better job opportunity, use your free time to earn some money by taking on part time job offers. Earning a little is better than not having any income at all.
As you try to pay down your credit card debt, minimize your personal expenses. You might have to give up your personal whims or luxuries until you manage to get out of debt. Rest assured that your sacrifices will pay off.
Learn your lessons! This time, be more discreet in using a credit card for payment. If you are not sure whether you can pay your balance in full by your due date, it is better to put off the purchase rather than risk being in bad debt.