Credit is a topic which is often discussed and not as much is known about it. This article will focus upon the responsible uses of student credit. Within the United States, it is estimated that 55 million credit card users pay off their bill every month out of 140 million users. This article will explain how you can be one of the 55 million and how you can choose never to pay interest if you want to. This will help foster responsible uses of student credit.
When you are first working on building your credit, a cornerstone of your financial life is to live within your means. This is a strategy which you will want to take within your entire financial life. There are not as many financially disciplined people in the United States as there should be and this is why credit card companies make so much money off of finance charges.
The average American household is in credit card debt for about nine thousand dollars. When you think about the finance charges on an annualized basis with an interest rate of twenty percent, the average household owes eighteen hundred dollars in finance charges. You are paying out one hundred fifty dollars a month just because you could not live within your means. By living within your means, you can be sure that you will not pay any interest to credit card companies.
Responsibly using your student credit means that you only pull out your credit card when you know you can pay it off. Many college students pay for things without having the money to pay it off right away. That is part of the reason that the average college student exits college roughly twenty two hundred dollars in credit card deep.
The final key in responsibly using your student credit is to know the difference between your needs and your wants. When trying to decide what you can buy, you should only buy those things that you need. If there are things that you want but you don’t have the money to purchase them, then don’t buy it until you have saved up enough money to do that. This goes back to the first point about living within your means. Taking the time to save for that new high definition television will take longer but you will save money and receive greater satisfaction knowing that you paid for it up front. If you buy that high definition television and spread payments over a year to help your budget from paying it off in one month, you will be paying probably about one hundred dollars extra in interest. Is that high definition television worth an extra hundred dollars to you?
Hopefully this article on the responsible use of student credit has allowed you to see why you need to live below your means. Paying off your credit cards every month allows you to receive rewards the credit card offers while continuing to build your credit. Knowing the difference between needs and wants is the biggest key because you can decide what you need at first and then save for what you want.