Your first year in college means you have the freedom to eat and drink anything you want without your parents nagging, which is usually what leads to the dreaded Freshman 15. But that same freedom can lead to another more serious issue: an overweight credit card balance. According to a recent study, about 70 percent of college students have credit cards and the average credit debt of those students is $3,000, with graduating seniors averaging $4,000 in credit card debt. So how can students avoid the Freshman 15 when it comes to their credit? Here are a few tips:
Pick a healthy card to start out with: The new rules enacted by the Credit CARD Act of 2009 say that applicants need to be 21 years-old or be able to prove steady income in order to apply for a credit card, which makes it harder for credit card companies to target college students. But that doesn't mean that they are any less anxious to lure in the young crowd. When looking for the best student credit card, do your homework. Find out if there are annual or late fees and what APRs you'll be charged. Sadly, only around 25 percent of college students know how their credit card's late or over balance fees work, and only 15 percent know what their interest rate was. Always make sure you know what you are signing up for before you seal the deal.
Our recommendations for the best students cards: Citi® Dividend Platinum Select® Card for College Students (with no annual fee, up to 5 percent cash back and a 7-month 0 percent APR on purchases) and the JourneySM Student Rewards from Capital One® card (with no annual fee, 1 percent cash back and a cash back bonus for paying your bill on time.)
Be careful what you feed your credit card: You watch what you put in your body, so why not watch what you put on your credit card? Big-ticket items will drive up your balance and take longer to pay off, much like digesting a heavy, carb-laced meal. Cash advances come with very large APRs, which in credit terms amounts to chewing on a stick of butter. Knowing what is good to put on your card and what can trigger a landslide of fees will help you keep your credit balanced.
Plan ahead: When trying to lose weight, planning your meals out ahead of time helps you avoid temptation. The same can be said for planning out how and when to use your credit card. If you use it on the same bill every month and then pay off the balance in full, it will help you build your credit without being reliant on the card.
"When you're in college, a credit card should be considered a tool to help you build a credit history," Beverly Harzog, credit card expert and author of The Complete Idiot's Guide to Person-to-Person Lending, recommends. "If you graduate with a good credit history, you'll have an easier time renting an apartment or getting a car loan."
It's critical for college students to establish good credit so that when you graduate you can get an apartment, a car, utilities, etc. If you have bad credit, you won't be able to get any of those things without prepaying or paying in full.
Avoid second helpings: One credit card is enough to help you build your credit. Adding any more will increase your temptation to spend. Also, credit checks negatively affect your credit score, so applying for multiple cards can bring down your score. If you think you can handle the temptation, getting additional cards can improve your credit score by giving you more available credit, but only take on additional cards if you are absolutely sure you won't be tempted.
Remember, it's easier to maintain weight loss than to actually lose weight: The easiest way to keep your credit card debt in check is to keep your spending within your means. Keep your credit usage low. Use the card to pay off the same bill every month. And never use your credit card as a financial crutch. If you can maintain a healthy credit lifestyle throughout college, it will be that much easier for you to start your life once you graduate.