Don’t Fall Prey to Bad Credit Cards

Lots of hands showing off credit cards. Photo courtesy of Shutterstock.

As a recent college grad you are walking through life with a giant target painted on your back. It’s a target that only credit card companies can see and believe us when we tell you that they are going to throw everything they can at that target and hope that it sticks.

Do you remember the tables that would get set up on campus with the guys who would jump out with a clipboard and a sign up form and tell you all about the awesomeness of credit cards while trying to minimize the 30% interest rate? You’re going to get those same offers but now they will come in the mail.

The most tempting of these offers are absolutely the 0% teaser rate credit cards. If you play your cards right, these cards can be your best friend. These cards will allow you to make or pay off purchases—and not accrue any interest on those purchases for a few months or even perhaps a year. If you fell prey to one of those high interest credit card offers while you were in school and are confident that you can pay off the balance within the time period offered to you by the teaser rate card, transferring your balance to the teaser card can save you quite a great deal of money!

Hopefully, though, you were lucky enough to get one of the better credit cards for college students—the kind with the low interest rate and the low limit that are meant to help you build your credit and credit score. It’s worth it to keep this card (even if you decide to transfer its balance to a teaser card). Keeping the card open and using it regularly can help you build credit while you work to find a good job and will even help you get a better rate on a place of your own in the future (good credit means a lower deposit on a rental unit).

Speaking of which—do you know how to continue building your credit now that you are out of school? Do you know how to use credit cards to your advantage?

1. Never charge more than you can realistically afford to pay off within two months.

2. Always pay more than your minimum amount due. Even $10 more than the minimum is okay but if you can do more, you should. A good rule of thumb is to find out how much interest you’re being charged each month and tack that on to the minimum payment amount and pay that every month.

3. Actually use your credit cards. Cards that actually get used and paid off regularly are quite a boon for your credit score and history. An easy cheat is to use that credit card you got in college (with the low APR and credit limit) and use it to pay for things like your Netflix, Hulu and Amazon Prime subscriptions—things that you’re already budgeting for.

These things might seem small but they add up and you’ll be glad you have that good credit later—you can use it to help you find funding for the small business you’ve been dreaming of starting.