Understanding Credit Cards: What Students Need to Know Before Getting Their First Card
Starting to build your credit score usually begins with getting your first credit card in college or university.
Financial institutions are aware that the first card a student chooses is likely to be kept for a long time.
According to Robin Taub, a chartered professional accountant and author, these products are considered “sticky,” meaning that once you have a card and accounts with a bank, you usually don’t switch banks often. This is why there are many credit card promotions on campuses.
Taub advises students to be selective when choosing a card, considering factors like annual fees, interest rates, and rewards. The annual fees and interest rates should be low, while the rewards should be suitable for their lifestyle.
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Most credit cards come with interest rates at around 20 percent, with cash advances being even higher. Taub advises students to avoid dealing with interest altogether during this stage of their financial journey.
She suggests paying the full amount on time to avoid penalties and interest, thereby building a good credit rating.
It’s crucial for students to develop good spending habits and avoid accumulating high credit card debt by paying the full balance each month. Keeping limits low and reviewing transactions regularly can help in managing credit effectively.
