Before you get out into the "real world", it might help to start building your credit. You need credit to do almost anything these days. Employers often look at your credit score using your trustworthiness with credit to get an idea of how trustworthy you would be as an employee.
Young people often start building credit by purchasing a specific item, such as a car, or an engagement ring on credit. The lender is often the dealer or the store where you made the purchase. Those types of loans are called installment loans. But while those purchases will certainly help you build credit, they won't help you learn to use a revolving line of credit, which is what a credit card is.
You used to have to get a prepaid credit card in order to start building credit. Now there are many options for a student to get a regular credit card. Here are a few things to look for.
- No annual fee. There are so many cards out there with no annual fees, you shouldn't have to pay for a card - even if you are getting a rewards card.
- Low interest rate. Ideally, you won't be carrying much, if any balance on your card. You should always aim to pay it off in full each month. Ironically though, some believe that you will build your credit scores faster if you occasionally carry a small balance. The reasoning is that the score is based on your ability to use credit wisely. If you are paying it off each month, then you aren't really using credit. So to build credit, you may want to carry a balance occasionally.
- Rewards card. With all the options out there these days, it often makes sense to get a rewards card of some sort. But beware of the potential pitfall here. If you have to pay an annual fee or a higher interest rate to get the rewards card, then you are probably paying more than the benefit is worth! Make this the last of the important things to look for.
There are plenty of websites out there that will help you find a student Visa. The Visa website itself has a student section. usa.visa.com Other websites such as Credit.com , Creditcards.com , and Findcollegecards.com all offer help in finding a student credit card.
Once you have your card, it is important that you learn to use it wisely. The choices you make now can affect financial decisions for years to come. Not only will your credit score affect your interest rates on future purchases, but as mentioned above it is sometimes used by a potential employer and is also often used by your auto insurance carrier. You could be paying higher insurance rates, or lose a potentially great paying job because you were careless with your credit cards. Your credit score has a reach far greater than many people realize. So use your credit card wisely!