You’re enrolled in PSU online or a nearby college or university – what type of responsibilities should you take on? Some decide to work while in school, which helps you to learn financial responsibility. To further your financial education, you can take out a line of credit. Credit cards are an excellent way to learn how the financial system works. But be careful or you may end up in debt up to your eyeballs. You need to ensure that you’re paying off your credit card bills on time and not spending more than you can pay back.
If you’re a college student thinking about taking out one or more credit cards, here are some things you should know.
The Way Credit Cards Work
It’s not magic, but it’s not rocket science either. When a bank gives you a credit card that has money on it already, it is pretty much a loan. Whatever you use each month has to be paid back the following month in full to avoid interest. If you allow the balance to carry over each month, then interest will accrue. This is how millions of Americans end up in deep credit card debt. If you end up making a large portion, make sure to at least make the minimum monthly payments to avoid falling too far behind.
The Difference Between Debit and Credit Cards
There is a solemn difference between credit cards and debit cards. For one, credit cards come preloaded with money lent from the bank. Debit cards, on the other hand, don’t come preloaded. It isn’t usable until you put money on there. If you have a checking account, the bank you are with will issue you a debit card, so you can withdraw money from the account via ATMs, or use it at cash registers to make purchases. You have to repay whatever you use from a credit card, but debit cards is your own money, so no need to replenish the card until you’re ready to make more debit card purchases.
What the Qualifications are for Credit Cards
As long as you’re over 18 years old, you can apply for a credit card. Of course, you’ll need to have proof of income or a co-signer to vouch for you. Those who have a steady income are easily approved for credit cards. The amount of debt you have and your credit history also plays a role, but if you don’t have one established yet, then this won’t be a major determining factor.
Selecting a Credit Card
There are different terms that come with the credit cards offered by different lenders. Make sure to look over these terms to see if they are agreeable. Look at the interest rates, late charge fees, additional fees and bonuses. Some offer frequent flyer miles, which can come in handy when you travel during school holidays.
Why Get a Credit Card
There are many reasons why students decide to get a credit card. For one, it can help you build your credit, which you will need to get apartments, cars and other types of financing easier. It can also be useful for making purchases when you’re low on cash.