College Students - 5 Tips to Protect Your First Credit Card

Much has been written about the confounding (and compounding) mistakes made by college students and their handling of credit cards, so perhaps it’s best to instead focus on what students can do with their newfound credit to make the best four years of their lives even better.

Here are 5 safe things college students should do to take advantage of their credit cards, without getting further into debt.

1) Pay your bills online. Clearly, today’s college students are more technologically savvy than the rest of us. Students should channel that web dexterity and monitor more and more of their personal finance accounts online, if only because it’s easiest to set up monthly automatic pay options there. The single most important aspect of your credit score is the timeliness and consistency of payments, and paying several accounts on time every month goes a long way toward boosting your credit score. This is even more important because timely payment has reciprocal effects on accounts like car insurance because a higher credit score will almost always lead to lower rates.

2) Use it for the small things. It’s good to use your card regularly, and pay it off every time. It’s not good to have a lot of debt on the card and pay portions of it off irregularly. In other words, use that credit card in the convenience store when you need milk and pretzels, but not for that semi-irrational splurge on a new iPhone speaker dock. Make sure you have enough cash in your checking account for that one.

3) Try to lower your Annual Percentage Rate (APR). Credit card carriers are notoriously aggressive when it comes to setting interest rates for first-time card users. In fact this audience is so lucrative for credit card companies that they spend hundreds of millions of marketing dollars every year competing for brand recognition within the demographic. But any Econ 101 student knows that where there’s competition, rates will fall. Carriers might not advertise this flexibility in commercials, but you can have some luck on the phone.

4) Manage rewards online. The same web savviness discussed earlier can also be channeled constructively to monitor rewards on your credit card. Of course, credit card reward programs are not charitable endeavors; the carriers created the programs to boost customer enthusiasm and retention. But they are totally legitimate — and wouldn’t it be nice to pay for that spring break flight with miles, instead of having to work more hours at a part-time job — or calling home and trying to rationalize another gift from mom and dad.

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5) Make your post-graduation life easier. Real life comes quickly after school (if not sooner), especially when you’re looking at locking down that first apartment or car. Guess what the biggest ranking factor for most landlords and car sellers is? You got it. Credit scores. So while most of your time on campus spent not socializing involves trying to get a leg up in the real world, one of the best — and most practical things — a college student can do is keep his credit report clean.

Image: ilovememphis, via Flickr