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Tips to Assist College Students in Handling Credit Wisely
A degree isn’t the only thing a college graduate will take with them when they leave school—their credit report will likely already be well developed, and that’s a record that will be with them for the rest of their lives.
Once we begin using credit—for things as simple as applying for a cell phone, buying a computer on payments, establishing utilities in our name and of course using a credit card—we have a credit report. This report tracks how well we manage the credit we have and is key in determining if we get more, such as qualifying for a mortgage or a credit card, it’s also an important consideration when you apply to rent an apartment or land that dream job. That’s why it’s so important for students to maintain their finances and establish solid credit.
Using consumer credit wisely and establishing good credit builds a foundation that serves everyone well (Learn more: What your Credit Report Says about You).
New Rules for Credit Card Companies
New rules governing credit cards aimed specifically at protecting students went into effect in February 2010. Credit card companies are now prohibited from issuing cards to anyone under age 18, and those under 21 need either an adult co-signer or proof of income. There are other provisions in the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act that cover consumers—such as advance notice of changes, more time to make payments and terms that are easier to understand—and all apply to students as well.
Tips on Wise Credit Use
Even with these new safeguards, the best protection against getting deeply in debt is knowing the pitfalls and how to avoid them. Here are some tips to assist students in using credit wisely:
- Set up and follow a budget that includes paying off a credit card balance. “Maxing out” or charging up to your card’s credit limit can make sticking to your budget more difficult.
- Remember that cash advances, unlike purchases, generally have finance charges that apply immediately.
- Pay on time, every time. Whenever possible, pay more than the minimum payment owed to pay off the balance faster and save on finance charges.
- Keep records of your account number, expiration date and the phone number of your card issuer in a safe place.
- Never give out your credit card number, card verification number (which appears on or near the signature panel) or expiration date over the phone, unless you initiated the call and know who you’re dealing with.
- Elect to receive your statement information online. Like many banks we offer an alert for unusual transactions and reminders of when your bill is due. (More about eStatements)
- Consider making your credit card payment online to ensure it is received by the monthly due date. (More about free online banking)
- Routinely access your account information online to track your spending and to quickly identify fraudulent transactions. If you see a transaction that is not yours, notify your card issuer immediately.
- If there’s an error on your account, report it immediately by notifying your card issuer. Look for complete instructions on your monthly statement or your bank’s website and follow them carefully to protect your rights.
- Keep a copy of your sales receipts so you can compare what you bought with the charges on your bill.
- When making online transactions, be sure the site is secure. Don’t let others see you enter card information.
- Don’t lend your credit card to anyone, not even a friend. Ever.
- If you move, notify your card issuer immediately.
For more information about credit cards and manage credit, contact anyone at your neighborhood AmericanWest Bank. Or send us a question now. For additional information about the new credit card rules, visit the Federal Reserve website.
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