Tips for Students using Credit Cards

Credit cards are a good way to make instant purchases and pay for them later. They can be a boon for students who find themselves frequently strapped for cash. Let’s say you are a student who has to make an urgent purchase, but your funds from your parents or a scholarship at arriving at a slightly later date; in this situation, a credit card can tide you over. For students, careful management of their credit cards can ease their student life, while mismanagement can get them entangled into a downward spiral penal interest charges and debt.

To avoid pitfalls, here are few tips for students that will allow them to use their credit cards more efficiently:

Choose your credit card wisely

Different cards come with different features. When it comes to student credit cards, you should choose a card that complements your spending style and lifestyle. Students have a limited credit history, so credit cards for them are designed in a way that help them start building their credit history. Find a card that provides benefits to your student-specific lifestyle, such as no annual fee, cash backs, travel benefits, and late payment leeway. It should also provide a variety of options to redeem reward points. For example, many cards allow students to use reward points balance at certain online stores to pay for textbooks or dorm supplies. Make sure that you understand all the terms and conditions of the credit card.

You should check the fees and charges before you start spending on your credit card. It is best to know about the interest rate that you would be charged if you carry forward an outstanding balance. You should also be well aware about the annual fee, ways to earn reward points, and how to redeem these points. This knowledge can help you to use your card in an efficient manner and assist in avoiding undue expenses or penal charges.
 

Pay your monthly dues in time, and in full

Paying your monthly outstanding amount in full on or before the due date is the only way to avoid interest and other charges. If you are carrying forward a portion of your outstanding amount to the next month, you have to pay an interest on this amount. If you are unable to pay the entire due amount, at least try to pay the maximum amount possible, and that too at the earliest. This will minimise the interest that the credit card company will charge.
 

Spend wisely

One of the golden rules of credit-card usage is to spend only an amount that you can afford to pay by the payment due date. Using credit cards to purchase things that are beyond your budget is the easiest way to get into a debt cycle.
 

Check your credit report regularly

Credit cards can help you to build a good credit history and score. This will open up future opportunities for getting easy loans and many other financial offerings. Pay your credit card dues on time and build a healthy credit score to help you in the future.

A credit card can be a good friend and can help you with your finances. Use this powerful financial tool wisely, and build a great career ahead.

Disclaimer: Copyright Kotak Mahindra Bank Ltd.