This circle of thought could have gone on forever. Getting your first credit card marks an age of additional financial freedom. Think of all the things you can do in the future with a good credit history:
- Buy a new car
- Rent an apartment
- Buy a house of your own
Just to name a few. So what did I do? I waited. I did some research, and I came across a deal Discover was offering for a student credit card. My offer came in relation to my student loans, so I applied through that, but their website also has a new card for students called the Discover It card.
Discover accepted my application right away, and they offer great perks. I have no annual fees, I get a 5% cashback bonus on certain items every quarter, and I can use my rewards on my favorite sites, like Amazon.
As the owner of a new credit card, I made a promise to myself to use it responsibly, so here's my tips on how to start building credit history the easy way:
1. Don't activate your card as soon as you get it.
Let the novelty of having a credit card wear off before you call the activation number. How long you wait is up to you. That way, you won't be tempted to buy the first big ticket item your credit line allows just because "you can".
2. Treat your credit card like you would a debit card.
As far as I'm concerned, the two cards are the same. Don't buy anything with your credit card that you don't have the money in your checking or savings account to cover. Just because you have a credit line of $500 does not mean you should buy something for $450. Or even $250, unless you are prepared to pay it off in full in the very near future. That brings me to my next two tips:
3. Link your checking/savings account to your credit account in order to make online payments.
Set your settings to receive email and/or text updates when new purchases post to your account and check the website often. This makes it very easy to make payments often and on time.
4. Pay your purchases off in full as soon as they post to your account.
When starting off a new credit card, the phrase "minimum payment" should never cross your mind. Pay off purchases in full right away to ensure you have the money in your bank account to do so before your monthly payment date rolls around. Make this a habit.
5. Start paying off monthly expenses such as student loans or bills with your credit card.
You can do this even before your loan deferment period ends to keep your interest low, and paying utility bills shows responsible credit card use.
I highly recommend Discover's student card for your first credit card, and I've also heard good things about the Chase Freedom card. They sometimes offer special deals if you have a Chase bank account.
What have you done to build your credit history? Share your tips by commenting below!
To save money on books each semester (that you can buy with your credit card!) be sure to check out my post on Big Time Book Savings!