Unless you majored in business or accounting in college, your “adulting” experience in regards to finance is probably pretty limited. The pressure of finding a job, paying bills, buying a car, and handling your money can be very overwhelming. One thing remains consistent; Every company or store wants you to open a credit card. Before you do this, however, there are five big mistakes that many students make with credit cards and we want to help you avoid them. 

1. You don’t think credit is important: Here’s the deal, credit matters a lot. If you handle your credit responsibly, you will set yourself up for plenty of money saving opportunities. 

Good credit means:

*Best interest rates on mortgages

*Lower premiums on car insurance

*Best offers for rewards on credit cards

*Potential employers may look at your credit

*Lower deposits when looking for apartments

2. You shrug off a late payment: Don’t take late payments lightly. Late payments and defaults stick out on your credit report. These negative items stay there for seven years. 

3. You don’t know what you spent (or where you spent it): It’s your credit card, so you are held accountable. Not knowing what you’re doing with your money and building up a credit card debt will inevitably affect your credit score. No one wants to leave college with debt. You’ve probably already got student loan debt: Don’t make it worse. 

* Set up a budget & track your spending 

4. You don’t understand that compound interest is evil: It is interest on interest you have already accrued, it makes your debt grow faster. 63% of college students paid off their credit card bills, but 25% still worried about their debt.

* Let’s look at it this way: If you have a balance on your credit card of $5,000 with a 20% annual percentage rate, the minimum payment on this debt is $133.33. If you only pay the minimum, it will take you 277 months to get rid of your debt. That’s over 23 years. You will end up paying $7,732.49 in interest on your $5,000 balance. So you end up paying $12,732 for what you bought on your credit card. 

*Don’t relax until your balance is $0

5. You don’t understand the connection between your credit cards and your credit score: If you keep a high balance on your credit card, your credit score will go down.  Your credit utilization accounts for 30% of your FICO score. 

* If you have a $1,000 credit limit, don’t spend more than $300 during the month. This is a 30% ration (300/1000). The lower the ration, the better. 

While this is all great information to be aware of before getting a credit card, what happens if you make a mistake? 

First, if you’re late on a payment, call your issuer. The best thing you can do is tell them it slipped your mind being a full time student. They may be lenient. If your card is maxed out, stop using it until the balance is paid off. Your score will go up as the balance goes down. It also is not a bad idea to rethink having a card. 

Another great thing you can do is come by Nonprofit Financial Services. NFS now offers  Credit Repair Services. Our local nonprofit organization will provide you with a free consultation with a snapshot of your current credit. Our fees are performance based starting at $99 and $50 per item removed. Those of you whose credit is in bad shape, don’t worry. We cap our fees at $500 which means you will only pay for 10 of the items we remove. We also offer a payment plan with 4 installments of $125.