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How to Use a Credit Card in College

Updated on October 1, 2012

It is likely that you have heard the dangers of credit cards. Additionally, you have probably discovered some of the many benefits of a credit card as well. Therefore the question is asked, "As a college student, should I get a credit card?"

Of course, if you decide to get a credit card, you will then have to determine what kind to get and how to manage it intelligently.

A credit card is not for everyone. If you have a lack of self control, struggle with managing a budget, and tend to make impulse purchases, I would highly recommend that you avoid a credit card until you have a high paying job.

However, if you are cautious with your finances and know how to control your spending, a credit card is probably a good idea for you.

Benefits of a Credit Card in College

College is all about preparing yourself for the real world. There are three reasons that owning a credit card during college can help you better prepare for the future:

  1. You begin to build a credit score.
  2. You will have to know how to manage a budget and debt in the near future anyway - you may as well discover how to do that sooner than later.
  3. A credit card gives you potential to save and make a lot of money - as many cards provide points or cash back, meaning that you actually earn something when you spend.

All-in-all, a credit card is a huge benefit if it is used effectively and intelligently. If you can be smart, getting a credit card will give you a huge boost up in life.

Debt Statistics

25% of Americans have more credit card debt than savings.

46% of Americans would have credit card debt if they faced a surprise expense.

The average credit card interest rate is 29.4%

Dangers of Having a Credit Card in College

College is a time of collecting massive amounts of debt, in addition to a love for having fun (which can cost a lot as well). In college you are making little-to-no money while spending a large amount on student loans, housing, living expenses, and entertainment. Failing to keep your budget in line during this time in your life can end up hurting you significantly throughout the rest of your life.

Several of the primary dangers of getting a credit card include:

  1. Spending more money than you have and starting off life with a huge amount of debt.
  2. Paying high interest rates on borrowed money.
  3. Hurting your credit score.
  4. Paying annual credit card fees.
  5. Spending more than you would have otherwise.

Although a credit card presents a lot of opportunities, it can also lead to a lot of trouble. Credit card debt is difficult to pay off if you let yourself fall to far behind. In addition, the fees and interest rates can cause a $10 item to end up costing doubt that. Do not get a credit card if you cannot handle your budget.

Choosing a Credit Card in College

What to Look for in a Credit Card
What to Avoid in a Credit Card
$0 Annual Fee (Permanently)
Any Annual Fee
Low interest rate (close to 10%)
High interest rates (20%)
Cash Back OR Points
No Rewards
Even if you are just starting out with a credit card, it should be possible to find one that has no annual fee, offers a lower interest rate, and provides you with cash back or points. Do not settle for less.

Avoid American Express

I have run into several people in college who only have an American Express credit card. This is because they offer high returns and rewards. However, they offer this because they charge businesses more to accept the card. Therefore, many businesses do not accept this card.

Save yourself the hassle and embarrassment of going somewhere and having your card not accepted. If you are only going to have one card, make it a visa or a master card.

What to Consider When Choosing a Credit Card

From the moment most of us turn 18, we are bombarded with credit card opportunities from a plethora of companies. In addition to Visas and Master Cards, we get invitation to purchase an American Eagle, Macy's, or other businesses charge cards.

With so many options, what card should you choose? Or should you just choose all of them?

The most valuable card will provide you with no annual fee, a low interest rate, and rewards. I would not select a credit card that did not offer all of the above.

In regards to store charge cards. Be very careful. Stores know that people purchase more on a card. In fact, when fast food restaurants first started accepting credit cards near the turn of the century, their average sale increased by about 5%.

When we pay cash for something, we are much more careful because we see it leaving our wallet. However, if I am simply giving the cashier a piece of plastic and he is giving it right back, it doesn't seem like as big of a deal. While I was only planning on purchasing one item, since I am paying with my card, I think "Sure! Just add the drink as well."

If there is a store that you shop at regularly, and the amount of savings that you receive for having a store card are significant, consider getting the card. But I would suggest that you do not receive more than one or two store cards. Additionally, if you get a store card, pay it off right away. Make the purchase on the card so that you receive the discount, and then pay off the card.

The reason stores give away charge cards with huge coupons is because many people forget to pay off the card and pay 25% interest on their purchases. You lose the discounts quickly if you send in your payment late.

You really only want to have one or two credit cards. Any more and you can start forgetting what has been paid, when it was paid, and you are stuck calling countless people if you lose your wallet.

Keep it simple. Only have a card or two.

Steps in Setting Up Your First Credit Card

  1. Choose a card with no annual fee, lower interest rates, and points or rewards.
  2. Set up automatic deposit so that the ENTIRE monthly bill is pulled out of your account on the due date (any money left on the card will acquire high interest).
  3. Keep track of how much you have and how much you spend.
  4. Never make a purchase that you can not pay for immediately.
  5. Save up an emergency fund before spending money on luxuries.

How to Use a Credit Card in College

Now that you have a credit card that offers you money or points back (my current card gives me 1%-5% back on every purchase), use it for just about everything. Many business professionals receive free flights regularly because they make work purchases on their credit card, receive points, and have their company pay them back. It's a great way to receive a bonus!

However, before making a purchase with a credit card, consider these things:

  • Do I need to purchase this item or is it a luxury?
  • Can I afford to make this purchase without my card? Do I have enough money in the bank right now to cover it (even after subtracting every other purchase I have made on my card)?
  • Would I purchase this item if I had to pay cash for it right now? Will I regret this purchase later?
  • Can I make this purchase after paying for my necessities and placing some money in savings?

NEVER purchase something with money you do not have. Your credit card should not be used to purchase items using next months paycheck. Only make purchases that you can immediately pay for in cash. This will eliminate the risk of you building up credit card debt.


Financial Success in College

College is a great time to enjoy life while preparing for the future academically, in relationships, and financially. With the cost of education so high it is easy to gain a false understanding of the value of money in college.

Start looking at purchases in terms of hours rather than dollars. For example, if you find a job where you make $10/hr. Before you buy that Abercrombie shirt for $50, ask yourself if it is really worth 5 hours of work.

You might say, please, I am going to make $100/hr after a get my degree. So you think. The economy is never a sure thing. Make purchases based on your present income, not your expected future income.

All-in-all, having a credit card in college is a great opportunity to prepare for life and start managing your finances efficiently. As said to Spiderman, "With great power, comes great responsibility". Enjoy the new power of the credit card that you have just received.


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    • Simone Smith profile image

      Simone Haruko Smith 5 years ago from San Francisco

      Such good advice! I remember watching kids blow through thousands of dollars in my freshman year of college as they enjoyed the freedom of unmonitored spending for the first time. Of course, many of them are still paying for that indulgence today. It's far better to be responsible from the get-go!

    • Robert Erich profile image

      Robert Erich 5 years ago from California

      Glad you enjoyed the article! And yes, avoiding the interest charges is key to making the credit card worth it. That is great you have a shared card with your mom! They say that sharing your card with a parent can really help you improve your credit score. Good move.

    • yougotme profile image

      Renz Kristofer Cheng 5 years ago from Manila

      Another fantastic hub, Robert! I agree with you that we should only use credit card when we know we have a backed up cash for it. That way, we can make sure that we maximize the use of credit card (e.g. avoiding high interest charges).

      I personally have a credit card, but it's just an extension of my mom's card. So, I guess that puts up more control in my expenditure. :)

    • Robert Erich profile image

      Robert Erich 5 years ago from California

      @Leah: Thanks, and I appreciate your input. The more I learn about you the more of a super awesome person you become in my mind! I think many people could learn from you.

      @Nicole: I'm glad you enjoyed. And yes, if you're smart about it, a credit card is great to have. In fact, most people who will read this article are probably qualified to get a card (because they are smart enough to research it). The people who really need to be careful with cards will probably never actually research them.

      And yes, you can't go wrong with Spiderman. ;)

    • nicole-cw profile image

      nicole-cw 5 years ago

      Really helpful! Especially since I’m thinking of getting a credit card soon. I’ll definitely have one card, like you said to keep things simple. Besides, I don’t think I’ll be spending much. At least for now. And I really like how you seamlessly added the famous quotation from Spiderman!

    • leahlefler profile image

      Leah Lefler 5 years ago from Western New York

      You have great advice here, Robert! I had a credit card in college and would pay off the balance (in full) every month. I always made sure to charge at least one item to it, and was able to build up a high quality credit history by the time I graduated. I was able to buy my car without a cosigner once I landed my first job, as I already had a great credit score!

    • Robert Erich profile image

      Robert Erich 5 years ago from California

      Very good way to sum up that point - not all credit cards are created equal. Appreciate you stopping by!

    • internpete profile image

      Peter V 5 years ago from At the Beach in Florida

      Great points. I also like that you pointed out that not all credit cards are created equal. One really has to look at the details, and find credit cards that won't cost money annually or in other ways. It is important to compare your options! Great hub, voted up and shared.