Credit Card Tips for College Graduates

June 1, 2009

Applying for and using a credit card during college can help you to start building your credit history. Managing your use of the credit card and making the payments are two keys to building a good credit history that will benefit you in the future. Of course, a credit card is just the beginning when building your credit history but it is a good place to start if you can pay off your balance in full each month.

How to get approved for a card

One factor that goes into credit card approval is having a source of income. Having a job, even if it’s part-time, is one source of income. You may receive money from other sources that you can also include on the credit card application. The bottom line is that credit card companies want to extend credit to consumers who have the ability to repay what they use.

If you don’t have any income, Mom or Dad can also help you get started with you first credit card. See if they are willing to add you as a card user on one of their accounts. The benefits of getting a credit card this way is twofold. First, it provides you with a credit card to use, so it teaches you how to manage your money. Second, it helps you to build your credit so you’ll be able to qualify for other types of loans and credit in the future.

Good credit card options and things to watch out for

If you’ve even perused the credit card possibilities out there, you know that there a myriad of options available. So how do you know which are the best credit cards for a college grad?

No annual fees. The first thing you want to look for in a credit card is one that doesn’t charge an annual fee. While cards with annual fees offer additional benefits, there are plenty of credit card companies that do not require an annual fee for you to have the card. This is an added expense that a recent grad doesn’t need.

Cashback options. Cashback rewards are not as generous as they once were but they can still add up over time with cards like True Earnings American Express or American Express Blue Cash.

Travel rewards. Whether it’s airline credits, hotel rewards, or cash back on gas purchases, look to see what travel rewards the card offers.

0% intro rate. Recent grads have needs such as getting their first apartment outside of college, which may also mean a need for furniture and other housewares. You’re also taking on your first career job so this may mean some new business clothes. If you find a credit card with zero percent interest or a low interest rate at the start of the card like Discover , you can make these purchases with your credit card without paying interest. The key is to not charge more than you can afford to pay off before the intro rate adjusts to its normal (and higher) interest rate.

Annual fees, rewards, and introductory rates are three things to consider when looking for a credit card; you should thoroughly read the terms and conditions before applying for any card.  Remember, introductory rates can be beneficial but they can also be a hindrance. If you don’t pay off the balance before the intro rate runs out the interest rate adjusts to what usually equals double digits—creating payments you can’t afford to make.

Using a credit card helps you to start building your credit history. Using the card responsibly and making your payments on time are two factors in building a good credit history that can benefit you in the future.


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Kristie Lorette is a personal finance writer who spent over eight years working in the real estate, mortgage and credit industries.

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