Well, you’re officially an adult, headed off to college, and ready to be on your way to responsibility. For all of the college students out there, below are some of the most important basics you need to become familiar with in regards to money/finance.
Be Better Prepared Than Most With These Tips:
Learn about the differences between debit and credit cards. Debit cards are tied to your Checking account, and your allowable spending is what you have in total deposits. While this helps to keep you out of debt, debit cards do not typically offer rewards, have less security than credit cards, and won’t help to build your credit.
Credit cards function as borrowed money from the issuer, which may lead to overspending. If you are responsible enough to handle a credit card, consider getting one to start you on your way to building necessary credit for the future, and earn rewards along the way.
Keep tabs on all your spending. Monitoring your Checking account either online or through a mobile app is as necessary as attending classes. The last thing you need is more added stress with unforeseen fees and penalties.
Choose a bank or credit union with limited/no ATM fees. Those couple of dollars every time you hit the grocery store will add up over the semester. See some Checking account options here.
The Prepaid Card option. Prepaid cards are another option for responsible spending. The spending limit with these cards is also constrained to your (or your parents’) deposits. They are accepted just about anywhere credit/debit cards are accepted also. They can be reloaded with reload packs that you find at supermarkets, drug stores, etc. by you or your folks. Some also offer rewards and bonuses.
Avoid cash advances with your credit card(s). This is the process of obtaining cash by borrowing money with your credit card via an ATM, or by cash advance checks deposited into your bank account. Cash Advances come with extremely high interest rates, which often go into effect immediately as opposed to regular spending that only accrues interest when carrying a monthly balance.
Choose a credit card with no annual fee and zero liability fraud protection. As a student your spending typically won’t be great enough to offset the annual fee involved with some rewards credit cards on the market. Fraud protection is always a good backup plan in case your card gets lost/stolen.
Protect your future by planning ahead. Making early mistakes with credit will lower your credit score, and could make it difficult later on in life when securing a house, car, and other important transactions.
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