Credit cards help individuals access the money they can borrow immediately, although they have to pay it back as soon as possible.
Nearly 200 million Americans own credits, and many individuals own more than a single card. While credit cards can be extremely helpful, they can also be a handful to some people, especially students.
College students have a lot going on, especially with their finances.
So, it’s always encouraged that they build their credit to their advantage, and having a credit card (and using it well) is one way they can do so.
But how do you know you are capable of handling one?
Here’s what to consider before you get a credit card.
Your credit score will depend on whether you have already begun working on your credit or not.
In other words, you may have either taken out a loan or not yet partaken in any credit-related activity. If the former applies to you, your credit history now exists, and any related transactions will stay on your credit report.
This will, in turn, influence your credit score.
Your credit score is a reflection of your credit history. The number indicates what you’ve transacted or borrowed and if you can pay the company back.
Also, it is the basis by which lending institutions or credit card companies determine if they can lend you money or not.
If you already have a credit score, you can get various credit card options with lower interest and possibly a few perks.
On the other hand, a bad credit score can either get you limited credit card options, some with high interest, or you may not get one at all.
Getting a credit card is doable without a credit history and score, but you only have limited options, with higher interest and lower credit limits.
However, you can build credit despite not having done any credit activity by getting merits from paying rent or utility bills.
Source of Payment
College is, without a doubt, costly. Besides the insanely high tuition fees, there are other payments you have to make, such as certain learning materials, tools, and miscellaneous things like projects.
Getting something like a credit card can be challenging, with several things to pay for.
A means to pay your credit card debt is necessary. It is even a requirement to have some payment source to ensure you can pay back what you borrowed.
The obvious is, of course, having a good-paying and consistent job. However, credit card companies may also consider investments if you dabble in them.
Getting a job is one thing, but getting a job as a student can be complicated. Time is your enemy here, as you may have classes with varying schedules.
What’s more, you are more likely to get a part-time job, which typically offers lower pay than a regular position.
If you already have a job, you have to ensure that your payment is enough to cover your expenses, especially the ones you will be making from your credit card.
While you may have a decent income, what will be left of it once you have spent it on your regular expenses?
Therefore, you need to assess your expenses to see if you can adequately pay off every credit card swipe.
Consider how much you spend daily. Your expenses depend on your living conditions, additional utilities, and college-related expenses.
If you live with your family now, your expenses may be only a few things like fares, gas money, and phone bills.
Other utilities like electricity and water bills may also be of concern if you contribute to your household.
On the other hand, if you live alone in your own house, apartment, or dorm room, you have to work with expenses on your own. Rent, utility bills, and food are something you have to handle alone.
Another thing you have to consider is what you want to use the credit card for.
For example, is there something related to your schooling you need to spend? Or do you want to keep it for emergencies?
You have to plan on what you plan to use it on so you can, in turn, see if whatever is left from your expenses is enough to pay back the money you’ll borrow.
If you need fast financial assistance, a credit card can help you. However, it is not the only option. You could make other choices depending on your needs and capacity to handle them.
You can explore other ideas if you can’t get a credit card due to the inability to meet the requirements or inability to pay off debt on your own.
For example, you can become an authorized user on a family member’s credit card as long as they are willing to help pay for your college expenses.
On the other hand, if you feel like getting a credit card may not be for you, you could take out other loan options.
You can choose from general and flexible personal loans to the more specific ones that can fund a particular necessity.
Alternatively, if you want a loan but still wholly or partly rely on your parents, you can have it in their name (with their permission, of course), or you can do what is called joint borrowing, where you can issue the loan with your parents so you can help repay the debt.
To Sum it Up
When deciding to get a credit card, especially as a student, there are several things to consider.
First, ensure you can handle and pay off the debt it comes with.
Second, look after the credit you have built, as good credit brings you great options and perks.