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Student credit cards: What you must know
A student card is either an add-on card or a secured card (a credit card issued against an FD). Now credit card is a tricky instrument. If used well, it can bring a host of benefits, but if misused it can put you in trouble.
Here is a list of dos and don'ts for students who use credit cards:
1. Never delay your payments
While you do not have control over repayments when you have an add-on card, the onus of repayment on a secured credit card is totally on you.
It is very important to build a credible credit history right from the beginning. It not only makes you loan attractive, but also disciplines you financially.
You also get an advantage to build a strong credit score very early on in your career.
2. Pay your dues in full
It is very attractive to pay the minimum amount due as it is light on the pocket. But remember THAT is a temporary phase. It will all come back to you many times more. So make sure you pay the entire amount due every month.
The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.
Student credit cards: What you must know
3. Keep your payment records safe
You never know when you will need them. There may be errors while calculating the payments.
4. Keep a tab on your credit history
We often educate people they should keep checking their credit score regularly. This enables an individual to be aware of the fact that there are no problems on their credit score so that they are loan attractive all the while.
Student credit cards: What you must know
5. Restrict your credit cards to just one or two
Just because credit card companies call you to offer a card, do not keep applying for them. Manage your cards well. Just have one or two and stick to them.
6. Keep your credit utilisation low
If your credit card has a limit of Rs 1 lakh, do not spend the entire limit. It is always advantageous to the card utilisation less than 30 per cent.