Your best credit card strategy is to have one card with a low interest rate and a low credit limit ($500), use it sparingly, and pay it off every month. This will serve your goals of building a healthy credit history and having funds available for emergencies without the temptation to indulge in uncontrolled spending.
Employing your credit card to pay for items you know it is possible to afford would be the smart approach to use credit. It's handy and helps you build your credit history, and that is a great factor. Employing credit as an extension of the income, to pay for items you can't genuinely afford, increases debt, and that is a negative factor. Keeping these concepts in thoughts can enable you to control the urge to get items you can't genuinely afford.
Credit cards are not extra income or income out there to you to invest. They're loans that you simply need to pay back, with interest, which implies that every little thing you buy together with your credit card ends up costing you additional than the acquire price. The longer you take to pay the balance, the additional your purchases cost and also the less income you may have out there to invest on other items. For slightly reality check, get in the habit of calling your credit card a "loan card," and when you are tempted to utilize it, ask yourself if you are willing to take out a loan with high interest in order to have the item you are thinking of getting.
Ignore the credit card sign-up tables on campus. Do not be tempted by gives of "free" goods like CDs, T-shirts, giant bags of M&Ms, or other cheap trinkets. These sign-up incentives are not genuinely free if you sign up for a credit card with an annual fee or a higher than necessary interest rate just to get the "free" gift. 175. Keep an emergency fund of $500 in a savings account so you won't feel forced to utilize your credit card when an unexpected expense comes up. Your emergency fund will also provide peace of thoughts and reduce your income related stress. If you may have to utilize your emergency fund in a pinch, build it back up as soon as possible.
If you can't afford to keep a cash emergency fund, leave enough credit out there on your credit card to cover emergencies or unplanned needs like medical expenses or car repairs. Having this cushion for emergencies is one of the main reasons for having a credit card in the first place.