‍5 Ways to Use Your Student Credit Card the RIGHT Way‍

According to CollegeFinance.com, the average credit card debt for college students is $3,280. This is probably a result of the high cost of college and the necessity for students to use credit cards to pay for expenses like textbooks or even unexpected expenses. As a result, credit cards are just as readily used for luxuries like fast food meals or internet shopping binges that, if you're not careful, can lead to significant debt.

Thankfully, there are ways to combat accruing credit card debt while in college. This is how you do just that!

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Before we get started, Vincere Wealth Management has a great blog on how to choose your first credit card that will definitely help you! So feel free to check it out.

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1. Find credit unions with low interest rates

One major perk of credit unions is their often cheaper credit card interest rates. However, without work experience, students may struggle to meet eligibility requirements. This person may need to have their parent or legal guardian add them as an authorized user.

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‍Read more: Best Credit Union Credit cards

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Students can get a leg up on building credit and opening their first independent accounts by becoming authorized users on their parents' or guardians' accounts. 

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Less interest = less worry for you!

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2. Pay Off Your Credit Card in Full Each Month

Always make a monthly full payment on your credit card balance. The number one guideline of credit card use is to make monthly payments in whole and on schedule. If you just remember this one piece of advice, you'll be fine! That's literally it!

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The chain of action looks like this:

• Make a purchase on the credit card 
• Pay the balance of what you just purchased: this way you have 'money in the bank' to pay it off.

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Carrying a balance from one month to the next is a dangerous financial habit to fall into. This could come back to haunt you if you acquire your first real job after graduation and your credit limit rises. It's inevitable that this will lead to financial hardship. So start developing the habit of paying it back in FULL.

Without carrying a load, you can still reap the benefits of credit card use, like rewards, consumer protections, and improved credit.

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 Here’s a major hack to ensure you pay off your credit card in full each month:

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• Set up automatic payments for your credit card: 

 Signing up for automatic credit card payments is one of the best ways to make sure you always pay your credit card bills on time. Of course, you'll need to make sure you have enough money in your bank account to pay for your automatic payments. But if you can set up autopay for your credit card bills, you won't have to remember to pay them every month and will still get the benefit of a good payment history.

Here’s the best College Student Credit Cards of 2022

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3. Create a Budget

We mention this quite a few times in our blog so you know the drill! Always, always have a budget. This is after all the backbone of financial success.  And this includes what you plan to use your credit card each month for. Have doubts that you can cut back on credit card use and still pay off your balance in full each month? There's a quick and simple solution, and if you implement it, you'll see additional benefits as well.

If you make a spending plan aka a budget, you can put your mind at ease knowing that every dollar is being put to good use. It's still a good idea to develop the practice of budgeting even if you don't have a credit card. Without carrying a load, you can still reap the benefits of credit card use, like rewards, consumer protections, and improved credit.

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How To Create a Budget?

Starting a budget is easy! Here’s what you do:

1. Add up the monthly income you expect from all sources
2. Categorize and add up the monthly expenses you expect to pay
3. Subtract expenses from income
4. You now have a budget!

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Note: Always pay yourself first, meaning add to your savings. Your goal should be to see how much you make and to set a plan for what goes out.

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YOU tell your money where to go.

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4. Learn How to Build Credit Responsibly

One of the best ways to build credit is to get a student credit card. For example, if you manage your credit card well and pay it off in full every month, you will never have to pay interest. This is not the case with student loans. It helps you build credit for free. But it's not the only way to improve your credit score! It's important to learn how your FICO score is calculated and how to improve it.

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For example, another way to build your credit would be to:

• ‍Spend responsibly: It may seem like you have to use your credit cards a lot in order to raise your credit score. A credit score, on the other hand, is not based on the exact amount but on how the account is used. The two most important parts of your credit score are how well you have paid your bills and how much of your available credit you have used. Paying your bills is important, but not overspending is just as important.

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5. Have an emergency fund- this is key

Save up three to six months' worth of living costs in a liquid account that earns interest. So, if you lose your job or have a big expense that you didn't plan for, you won't have to borrow more than you can afford to pay back. You already have that cash-on hand. 

One easy way to save for an emergency fund is to have your bank set up regular transfers into a savings account.

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Wrapping Up

The general concept of using a credit card like a debit card will help you maintain a good financial situation. Don't go shopping until you have the money to pay for it. Your credit account and score will remain healthy if you keep your credit utilization low and make timely payments on your transactions.

Starting to build credit early can help you reach your financial goals before and after you graduate. It can also help you get financial products and lower interest rates in the future. So start practicing these habits asap!

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