3 Credit Card Pitfalls Not to Fall Into as a New College Grad

When you graduate from college, you face a number of financial decisions – and new responsibilities. Once you’ve found a job, your newfound income could also help you access financial products that you didn’t have before – such as reward credit cards.

However, before signing up for a card or using a card on a regular basis, it is important to be aware of the three major credit card pitfalls that you should avoid.

1. Choosing the wrong credit card

The 2009 CARD Act restricted how credit card companies could market to college students and made it difficult for college students to get a card, but new graduates could be faced with a variety of card options.

It is important not to rush to sign up, even if tempted by the promise of a sign up bonus or other perks. You want to find a card that:

• Offers bonus rewards that match your buying behavior. For example, if you are spending a lot on groceries after you no longer want to dine in a dormitory, you might want a card with bonus rewards for grocery purchases.
• Does not charge an annual fee (or a reasonable fee). While fee cards are sometimes worthwhile, if the benefits of the card justify the cost, make sure you are getting the benefits you get before paying to become a card member.
• There are no other costly fees that you may incur. For example, some cards charge fees for international transactions. If you plan to go overseas frequently for business or pleasure, you probably don’t want that.
• Has a new card member sign-up bonus that you can easily earn: Cards often offer incentives such as: E.g. $ 250 cash after signing up, but you need to meet spending requirements to earn it. Unless you are spending a lot as a new graduate, there is little use to you in signing up for a card to receive a bonus that you do not qualify for.

Do your research carefully about the card options – there are plenty out there.

2. Charge more than you can afford

Credit card rates can get very expensive. If you pay off your card in full every month, it doesn’t matter – you don’t pay any interest. However, if you ask for more than you can cover when you receive the invoice, you end up owing interest.

If you do not pay off your balance in full, interest will make your purchases more expensive and require you to make a new monthly payment. When you use tomorrow’s income to pay yesterday’s bills, you reduce the likelihood that you will be able to live within your means – and more likely that you will end up deeper in credit card debt.

Avoiding this is critical. Keep a careful eye on what you are topping up and stop using your cards before your balance gets to levels that you cannot repay.

3. Forget about paying bills

It’s easy to let things through when you start out. Unfortunately, missing a single credit card payment can damage your credit rating for years. You don’t want a score that affects your ability to buy a car or take out a mortgage loan because you forgot to make a payment.

To avoid this, set up text or calendar reminders a few days before your payment is due. If you are on a budget and you are sure you can pay for your card in full, consider setting up automatic payments so you don’t miss your due date.

By avoiding these three pitfalls, you can ensure that your credit cards help you earn rewards and build credit without going into debt. They can be a great tool to help shape your financial future as long as you use them in a helpful way.

source https://collegeeducationnewsllc.com/3-credit-card-pitfalls-not-to-fall-into-as-a-new-college-grad/