Credit Cards for College Students: Tips to Avoid Risky Business

Whether a student at a university, a community college, or an online degree program - if you're a college freshman, you're bound to be inundated with credit card offers. Use these credit card tips for college students, courtesy of the National Foundation for Credit Counseling (NFCC), to avoid the proverbial risky business (a tainted financial future, debt for years to come) that can ensue when credit cards are not handled properly.

College Student Credit Card Tip #1: Be choosy.

As much as you'll be tempted to fill out an application for the first card you are offered (expect to see booths at your school), try to resist; Instead, figure out which cards work best with your spending habits and your ability to pay them back. What are you comparing? The annual percentage rate (APR), whether there is an annual fee, the length of the grace period, any penalty fees, and the way your balance is calculated.

College Student Credit Card Tip #2: Make a budget -- and stick to it.

As much as a credit card feels like "free money," it isn't. You'll still have to make a minimum payment each month, which means you'll need at least that amount in your checking account to cover the bill. Making a monthly -- or even weekly -- budget will ensure that you'll be able to pay everything you owe, including the credit card company. Track your spending by recording all transactions in your checkbook -- even debit card purchases. Speaking of debit cards, try to use them before credit cards, because the money will come out of your checking account immediately. This also helps you to save your credit card for true emergencies (vehicle repairs, an unexpected medical bill), rather than day-to-day purchases.

College Student Credit Card Tip #3: Protect yourself from credit card fraud.

Identity theft and credit fraud are unfortunate realities, but you can avoid these problems. First, never let anyone (no matter your relationship with them) borrow your credit card, or leave your card or billing statements lying around.

Also, do not give out your credit card number on the phone unless you are certain you are dealing with a legitimate company who will deliver the goods/services you are paying for (and beware of phony calls from people claiming to be with your bank or credit card company. Your real bank or card company will never ask for your full number on the phone). Giving to charity? Use cash, not your credit card. The NFCC rule: "When in doubt, don't give it out."

College Student Credit Card Tip #4: Know what credit history means for your future.

Making late credit card payments -- or even skipping a few, entirely -- may not seem like a big deal, but it can have plenty of negative effects on your future. Having a less-than-stellar credit history can actually affect your ability to get more credit later; in other words, if you max out and don't pay back, or if you consistently skip making payments, don't expect other card companies to approve you. Additionally, a shoddy credit card history will pop up on your credit report -- the financial background check run by everyone from banks to potential employers and property management companies. Hoping to buy a home in the future? Your ability to do so largely depends on your credit history (yes, even if you're married and your spouse has good credit). It may not seem to matter today; but five to 10 years from now, it will be the most important factor in your financial well-being.

U.S. consumers may request a free copy of their credit report once a year. For more information, visit www.annualcreditreport.com, or call 1-877-322-8228.