Despite the ongoing economic troubles, credit as a whole remains an important aspect of modern life. We need it in order to secure loans for businesses, homes and cars that otherwise would require many years of savings to attain. Used responsibly, credit can open many doors for the future. For college students just starting out, the best way to establish credit is to apply for a student credit card. If researched properly, these cards can help students build their credit history while keeping their overall debt to a minimum.
Do your homework
While on campus, you'll probably be exposed to some clever marketing campaigns by credit card companies. Things like much appreciated free food, or a t-shirt or two, are used to entice students to sign up for a card. Be weary of these attempts, as any check of your credit for these cards can lower your score.
Go online and check out the different options, interest rates and benefits offered by the various banks. Ideally, you should not settle for an interest higher than the high-teens (i.e. 19 percent), and avoid any cards that have an annual fee, or charge you extra for things like paying your bill online.
Some good offers
According to the popular credit card information site, indexcreditcards.com, one of the top picks for college students is thethe Citi Forward for college students, which offers 0% APR for 6 months, 17.24% variable after that, and gives you five reward points for every dollar spent. The good thing about this card is that for every 3 months you pay on time, it lowers your interest rate .25 points, going down as far as 2 percent total.
If a low interest rate is what you are looking for and you are not really interested in rewards, State Farm offers a good card with an interest rate as low as 11.99 percent variable. US Bank also has a low interest rate card of 11.99 percent, but its rates can also be as high as 20.99 percent.
Maintaining your card
Once you actually apply for and receive your card, be sure to use it as responsibly as possible. Keeping a balance of higher than 30 percent of your credit limit can begin to hurt your credit score; anything higher than 50 percent can really dig into it. Because that ridiculous little score is the be all, end all of credit in the U.S., you need to keep careful track of it.
Remember that you don't need many cards to build up your credit, one or two max is more than enough. Pay for little stuff here and there, but always pay in full the next month if possible. Do this for your 4 years of college and you'll emerge with a golden score good enough to lease a nice car to go with that job you just landed.
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