Are you in student loan debt? You’re not alone. The average college loan owed by the class of 2010 was up to $25,250 by the end of 2011. On a positive note however, on average, the credit card balances have dropped to $811, from a record of $3,173 in 2009. The percentage of students owning credit cards has also decreased from 84% to 40% within the past two years.
Due to the Credit Card Act of 2009, there are provisions in place making it more difficult for college students to access credit cards. For example, card companies are restricted from giving away free gifts. Additionally, card companies are to require that those under the age of 21 have a co-signer. For your information, NEVER co-sign for a friend’s credit card. This means that if they cannot pay it, you will be responsible for it.)
Although legislation is helping people do the right thing by implementing these restrictions, owning a credit card isn’t always bad. Building a credit score is a good thing, but managing this credit properly is critical. Here are a few things to remember:
- Seek cards that offer deals for students. For instance, some offer cash back on books, gas and other items for a lower interest rate and maximum spending amount.
- Use your credit card sparingly. It is good practice to charge a little on it every month – and then pay it off every month, too. This process will help you build your credit score.
- Do not get multiple cards and do not apply for store cards. You can read more about this on our post titled “Three Major Drawbacks of Store Credit Cards.”
What do credit cards and student loans have in common? If used sparingly and paid off per your agreement, they can actually help you build your credit score. A good credit score can help you rent an apartment, buy a car, get a job and more – all of which can be really important when you graduate.
Want more credit card tips? Search this blog. Have any credit card stories you’d like to share? Comment below!