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A photo of a Cal U student.A photo of a Cal U student.

Credit Cards

84% of undergraduates have at least one credit card.

50% of students have 4 or more credit cards.

82% of students carry balances and incur finance charges each month.

 The average balance carried by college students is $3,173.

What Type of Card Should I Get?

Below are descriptions of different types of credit cards.

  • Co-signed card. This is a card that a parent and student apply for together. The issuer uses the parents' income as proof that the loan will be repaid. Parents are liable for the debt incurred by the student.
  • Secured card. This is best for first-time credit card users.The limit on the card is whatever you give the bank as collateral. You cannot go over the limit of the card – once the money’s gone, it’s gone. This can test a child’s spending; Will he or she wipe it out without question? If yes, then maybe a credit card isn’t the best option for him or her – at least for now.
  • Department store or gas company credit cards. These cards typically have low spending limits that can allow you to start small and build your credit.

You’re Approved! Now What?

Pay on time. Paying your credit card bill on time helps you avoid late fees and improves your credit record. A good credit record leads to a higher credit score, which helps you qualify for lower interest rates.

Here are some tips for managing credit card use:

  • If your bill is due at an inconvenient time of the month (if it's due on the 10th and you get paid on the 15th), contact your credit card company to see if they can change your billing cycle to fit your situation.
  • Pay more than the minimum payment. If you can't pay your balance in full each month, pay as much of the total as you can. Over time, you'll pay less in interest charges, and that's money you'll be able to spend on other things. Also, you'll pay off your balance sooner.  
  • Keep your balance below your credit limit. Keeping your balance at or below 20 percent of your available limit can ensure you can continue to pay it efficiently.
  • Keep a record of your spending or check your balance online.
  • Avoid unnecessary fees. Credit card companies not only charge fees for late payments and when your balance is over the limit, but also for cash advances, transferring balances and returned payments. Some companies also charge a fee when you pay your bill by phone. Read your credit card agreement to learn more about the fees that your credit card company charges.
  • Read notices regarding changes to the terms of your account. Credit card companies can change the terms and conditions of your account including fee amounts, interest rates, billing procedures and other features. Reading these notices can help you decide whether you want to change the way you use the card or close the account completely. If you have a card with a variable rate or if you have an introductory rate that is ending, be aware that credit card company is not required to send you a notice prior to raising your interest rate.
  • Set a low minimum balance. This helps you control your spending habits. Spending an amount close to your credit limit or maxing it out entirely may make you appear to be a credit risk, as it shows you may be likely to overspend.
  • Review your monthly credit card statement for errors.

Tips for New Users:

  1. Understand the terms of the card. Know the interest rate, fees and payment schedule.
  2. Beware of 0 percent teaser rates. While 0 percent interest is enticing, the offer may tempt you to spend more than you can afford to repay. When the introductory rate is over, the interest rate will swell and so will your balance.
  3. Play with interest rates. To show how debt can accrue thanks to interest, plug some hypothetical numbers into credit card calculators. Those $50 shoes and last week's $15 pizza delivery can get really expensive when a 20 percent interest rate is applied.
  4. Pay on time. You will start to build a good credit history if you pay on time, every time.
  5. Pay in full. To avoid costly interest charges, you should try to pay your bill in full each month. If you can't, you should pay as much as possible.
  6. Don't go over the limit. If you spend too much, you'll incur additional fees for spending more credit than you've been allotted.

Did you know?

  • You can deny raises to your credit limit. If you receive a letter that congratulates you on being given an increased credit limit, call the company and say, 'No thanks.' Why deny the increase? Having too much credit available can negatively affect your credit rating.
  • One late payment will affect your credit for seven years.
  • Your credit card issuer can close your account anytime, for any reason. Credit card companies have been known to do this even to customers in extremely good standing simply because their account may not generate enough profit for the company.
  • Many credit card companies solicit college students on or near college campuses or other public places and entice them with free merchandise such as T-shirts or small amounts of money.