The ABCs of Credit Cards

Establish a spending strategy so you don't fall into credit card debt.

Under certain circumstances, it may be necessary for you to get a credit card.

  • If a credit card is absolutely necessary, shop around for the cards with the best terms, such as low interest rates and no annual fees. Before you sign up, make sure you know what you're signing up for and understand all of the terms, especially those related to late fees and variable interest rates. Some helpful questions to ask include:
    • What is the Annual Percentage Rate (APR)?
    • Is there an application fee?
    • What is the late fee?
    • Is there a charge for cash advances?
  • Monitor your credit card spending and avoid credit card abuse.
  • Only have one credit card and use it only for predetermined emergencies which you have decided on before you received the card.
  • Pay your balances in full each month, or at least more than the minimum payment.
  • Pay on time to avoid late charges.
  • Avoid cash advances (loans with higher interest rates).

Consequences of bad credit

The convenience of credit cards may tempt students to live beyond their means, but excessive credit card debt and late payments can have many negative consequences:

  • Impaired credit rating
  • Difficulties and increased costs for future credit
  • Limits to your options for investing money
  • Negative impact on your quality of life

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