Mistakes to Avoid with Student Credit Cards
Getting your first student credit card is exciting. But many pitfalls trip up college students along the way. Costly errors are easy to make.
In this comprehensive guide, we’ll highlight common student credit card mistakes and provide tips to avoid them. We’ll offer proven strategies to leverage your card responsibly as a young adult so it remains a valuable asset rather than a liability.
Let’s explore how to maximize the benefits of student cards while dodging detrimental financial missteps.
Failing to Make Payments on Time
Forgetting payment due dates and missing payments is easy with so many college responsibilities competing for your attention. But even one late payment can significantly hurt your credit, increasing interest rates and lowering credit limits.
To avoid this:
- Set payment alerts and calendar reminders for billing due dates
- Enroll in autopay to schedule automatic payments each month
- Pay down balances early in billing cycles to allow buffer time if issues arise
- Review statements often to ensure there are no missed notifications from the issuer
On-time payments are essential to building your credit score and profile responsibly. Don’t let a slip-up jeopardize your financial foundations.
Racking Up Credit Card Debt
High-interest credit card balances that carry over each billing cycle add up to costly long-term debt obligations. Minimum payments only prolong the balances.
To avoid this:
- Never charge more in purchases than you can fully repay that same billing cycle
- Make payments well above just the minimum due whenever possible
- Consolidate multiple card balances to lower APRs through balance transfers
- Set up automatic payoff of statement balances each month
- Leave cards at home that tempt overspending on impulse purchases
Debt piles up quicker than you expect. Avoid financing unnecessary purchases on high-rate cards.
Paying Late Fees
Most credit card issuers charge up to $40 for late payments. Just one or two late fees can negate any cash back rewards earned.
Avoid late fees by:
- Enrolling in autopay linked to a bank account to schedule payments automatically
- Setting email or text alerts before the due date to prompt making manual payments
- Paying your bill early in billing cycles to allow time for delays or issues
- Ensuring your checking account has sufficient funds on payment dates to avoid bounced payments
Late fees provide hassle and unnecessary costs. Fortunately they are easily avoided through account alerts and autopay enrollment.
Withdrawing Cash Advances
Cash advances let you obtain cash instantly through ATMs with your card. However, fees and high interest charges make them very expensive.
Avoid cash advances by:
- Tapping existing savings or student loans instead if extra cash is suddenly needed
- Using cards solely for planned purchases you can repay, not as makeshift ATMs
- Removing cards from digital wallets that enable push transfers to checking accounts tied to cash advances
- Asking the issuer to lower cash advance limits when available credit is very high
Cash advances provide temporary relief but long-term pain. Have backup savings for cash flow emergencies.
Applying for Too Many Student Cards
Opening many student cards simultaneously dings your credit with multiple hard inquiries and lowers average account age.
Avoid this by:
- Only applying for one starter student card at a time
- Waiting at least 6 months before applying for any additional cards
- Closing old or unused student accounts before obtaining new ones
- Prioritizing spending on one or two primary student cards
- Saying no to on-campus representatives pushing card applications
Pace credit applications over time as your profile develops to minimize score impacts.
Accepting Credit Limit Increases Too Quickly
As you demonstrate responsible usage, issuers may offer higher credit limits. Don’t blindly accept increases without evaluating need.
- Whether your income and budget justify charging more each month now
- The impact on your credit utilization ratio – avoid lowering it substantially
- Upcoming large purchases like study abroad programs requiring more available credit
- Whether to split available credit among multiple cards or consolidate onto one card
- Setbacks that could make an increased limit riskier like changing student status or loans
Be cautious about quickly accepting higher limits to avoid overspending temptation. Align increases with financial growth.
Not Monitoring Monthly Statements
Letting charges sit unreviewed invites problems. Failing to inspect statements routinely leads to missed fraudulent activity, incorrect fees, and poor spending habits.
Avoid this by:
- Logging in to review charges weekly – dispute anything unfamiliar
- Setting up purchase alerts via text or email for large charges
- Scanning statements to see interest charges, returned payments, or new fees
- Checking that recent rewards earned and payments made are posted
- Saving statements digitally to monitor spending patterns over time
Account negligence jeopardizes both money and credit. Get in the habit of routinely inspecting activity.
Using Student Cards for Investments
Some students fall into the trap of relying on credit cards to fund speculative asset investments like cryptocurrency or startup crowdfunding.
Avoid this urge by:
- Remembering that any investment gains remain theoretical until sold, but credit debt obligations are guaranteed
- Considering lower risk investments like an S&P 500 index fund when money allows
- Discussing investment plans with parents or mentors before tapping high-interest credit
- Funding investments incrementally from verifiable income rather than entirely via credit
- Avoiding investments you don’t thoroughly understand or that promise overnight riches
Credit should enable needs, not risky wants. Don’t let gambling rationalizations entice financing with expensive debt.
Not Monitoring Your Credit Score
Many student cards provide access to free credit score monitoring. But forgetting to check routinely leads to surprises down the road.
Stay on top of your score by:
- Logging in monthly to check your score and review changes
- Setting alerts for credit report activity – new accounts, inquiries, etc
- Disputing errors immediately that may unjustly lower your score
- Reviewing factors that impact your score and focusing on improving weaknesses
- Setting a goal score to motivate building credit diligently
Frequently check your score to ensure your profile reflects positive history. Don’t wait until denied for a loan to start monitoring.
Failing to Build Independent Credit
Many parents add children as authorized users on credit cards to help them establish history. But this doesn’t cultivate independent positive records.
Avoid this misstep by:
- Applying for your own student card solo after discussing financial readiness with parents
- Paying all monthly card bills from your personal checking account – don’t rely on parents
- Becoming an authorized user as a secondary strategy, not primary path
- Monitoring your personal reports, not assuming you inherit your parent’s good credit
- Talking with issuers about graduation programs to earn unsecured card approval
Building credit under your own name demonstrates you can responsibly manage and repay revolving accounts.
Letting Emotions Dictate Credit Decisions
Some students use credit cards for emotional fulfillment – shopping sprees when depressed or celebrating excessively. This mindset leads to overspending.
Cultivate healthy habits by:
- Discussing healthy coping strategies with parents or the school counselor
- Avoiding retail therapy and emotional spending triggers when upset
- Pursuing hobbies or passions that provide mood boosts like sports, reading, or meditation
- Setting savings goals for responsibly financing events like vacations or parties
- Remembering credit limits don’t equal Net Worth or self-esteem
Don’t let normal emotions cloud financial judgment. Establish smart habits, perspective, and priorities.
Ignoring Signs of a Problematic Relationship with Credit
If credit becomes less of a tool and more of a crutch, identify problems quickly by watching for:
- Putting common bills and purchases on credit unnecessarily
- Obsessively tracking or flaunting accumulated rewards
- Relying on cards when depressed or as self-validation
- Downplaying concerning debt levels or minimum payments
- Financing increasing lifestyle expenses beyond your student budget
- consistently spending up to credit limits
Address unhealthy issues head on through counseling discussions and resetting priorities before short-term use spirals.
Closing Thoughts on Avoiding Student Card Mistakes
College serves as the ideal environment for using starter credit cards responsibly with parental guidance and institutional protections. Keep perspective by avoiding emotional spending triggers and high-risk financial behaviors.
With prudent use, a student card builds your foundations for financial achievement long-term. But reckless missteps can significantly detract from future loan and apartment approvals. Tread carefully and intentionally.
Let your first card represent an empowering building block, not a looming burden tripping up your bright future. Avoidable errors remain obstacles you control. So pave a path today leading where you desire to reach tomorrow.