A college student's guide to not going broke

By Justin Boyle

School's in session, orientations are over and you're throwing out the last of your moving boxes. The realities of college life are starting to sink in. Other than the occasional supermarket circular or sheet of pizza-delivery coupons, nothing much shows up in the mailbox downstairs.

But one day an envelope arrives. It's stamped with phrases like "pre-approved" or "free rewards inside." After scanning the offer inside, you fill out the application form and send it back.

When your credit card comes, it's like a golden ticket. You pick some things out at a store, hand the card to the cashier and walk out with your items. You see something you like on the Internet, punch those magic numbers into the form and receive the confirmation page: Your item is on its way. You order pizza for some friends on your floor -- no coupons required.

In short, you have a massive amount of fun.

Then the bill comes. You can't remember spending that much, but one thing is clear: You can't pay it. Unable to meet your obligations, your debt begins to grow by the month. Soon, your finances spin out of control and before you know it, you're living in a gutter, crushed beneath the weight of your insurmountable debt.

How to do it right

OK, not every first-time credit card user meets this dramatic fate. It's entirely possible to use a credit card throughout college and still avoid the double-pepperoni-laden path to Skid Row. Here are some tips to make sure your first experiences with credit are positive:

1. Never miss a payment. It might seem odd to tell you not to spend more money than you have. After all, credit cards wouldn't exist if people didn't occasionally need to spend more than they have in their pocket. Still, it's always best to make sure you can pay your balance in full at the end of each month to avoid interest charges. But if you can't manage that for any reason, be sure to at least pay the minimum on your billing statement on time and make plans to pay off the rest off soon. Otherwise, you can quickly end up with credit problems beyond your wildest nightmares.
2. Read the application. You'd think this one would be a no-brainer, but many people just fill in the little boxes without reading any details about the card they're signing up for. If you can't bring yourself to read all the fine print, at least make sure you take note of key things such as your credit limit, APR and all of the various fees.
3. Keep it a secret. A nearly sure-fire path to bankruptcy is being "the one with the credit card" in your group of first-year friends. If you can be prudent enough to use your credit card for personal purchases only, you'll likely avoid a lot of headaches down the road.

Why it pays to be careful

Even if you're a generally cautious person, you can destroy your credit rating in just one semester with a few particularly bad decisions. You don't want to have to wind up paying for the mistakes of your younger self well into adulthood.

If you start off your life as a credit user with the right habits, they'll likely follow you throughout your years as a credit consumer. The benefits of wise credit spending are undeniable -- better interest rates and more lending options are two big ones -- and the negative consequences of bad spending can haunt you for a long time.

So remember: When that tantalizing first credit card application comes in the mail, toss it on your desk with the coupons and the circulars instead of tearing into it right away. Store the offers you get it in a nice neat pile somewhere or place it in a filing cabinet, if you're the type of student organized enough to own one of those.

Then, one evening when you have some time to set aside, do a little research into the cards you've been offered. Check the Internet for other cards that you may be eligible for and compare them to the mail offers you've received. The time you spend identifying the best student card for you will likely pay dividends down the road.

Most importantly, once you get your new card, pay careful attention to how you use it. You have a lifetime to use credit ahead of you, so there's no sense in ruining your standing before midterms arrive.