Are you ready for a credit card?

If you do not have one already, credit organizations will soon be trying to offer you a student credit card. Used properly, credit cards can boost your credit rating and make managing your finances simpler by reducing a multitude of payments, some of which can be made automatically to a single payment per month.

The bad news is that credit cards can be really expensive and these costs can sneak up on you and overwhelm you before you know it. Credit cards come with many fees, some up front, some hidden in fine print agreements that can create unexpected problems for you.

The worst aspects of credit cards only appear if you are late on your payments. Interest fees and interest charges can pile on quickly, especially when the attractive interest rate you were offered to get you to sign up suddenly increases (as per the fine print agreement).

Credit cards can weaken your resolve and lead to overspending. If you have a credit card, you should never ask yourself if you can afford the monthly payment for all of your purchases. Instead, as with everything you buy, you should ask yourself if you really need it and if so, if you can afford to pay for it when the bill comes due at the end of the month.

Keeping track of payments tip: only have 1 credit card!

Payments can be easily tracked online and downloaded. Personal finance software or spreadsheets can help you track and manage both your spending and payments, helping you keep track of your budget.

Tips for Credit Card Management 

1. Shop for credit carefully– check interest charged and annual fees and apply for the credit card that suits your budget.
2. Pay off the entire monthly balance to avoid interest charges, or make the biggest payment possible you can, over and above the minimum monthly payment.
3. Remember bargains are not really bargains if you end up paying interest on your credit card.
4. The dollar you spend today on credit is one dollar you won’t have in the future. It’s important to understand whether the purchase is a “want” or a “need.”
5. Keep your credit card receipts and review your credit card statements monthly to make sure there are no errors.
6. Set a monthly limit for each credit card – once you reach your limit, put your credit card away to avoid over-spending.
7. Remember the monthly budget for your credit card spending is a maximum spending limit, not a minimum.