This article over at DebtFREE-Revolution about who is to blame about student credit card debt got me thinking about my college experience. By the time I graduated from college, I had racked up thousands of dollars in credit card debt. After I graduated I moved to Chicago where I had a job that barely allowed me to make ends meet, and having to cut that check every month to pay my credit card bill didn’t help. What’s worse is that I knew that a lot of those credit card charges were a product of late night bar tabs, road trips and long distance phone calls.

For many students, college is the first time that they are independently responsible for their finances, and obtaining a credit card is an experience that can make or break their financial future. Credit cards can establish good credit or drive a student deep into debt. Not only do students have to avoid the temptation of using their credit card like cash, but they are also inundated by special offers and gifts for opening new accounts.

I remember the first time I reviewed my credit report shortly after I graduated from college. I had a dozen or so credit card accounts that I didn’t even know I had. You know what they were from? Each time I filled out credit card applications to receive free t-shirts and discounts at retail stores I was being approved for a new credit card. I think I had about 6 or so credit cards just from CitiBank.

Getting a first-time credit card in college is not such a bad idea though. It’s great to have on hand in case of emergencies, or to help finance educational expenses. But it is important to be educated about your options and how their use can affect your credit score and finances.

College students are prime targets for banks and credit lenders, so don’t be lured by free flat screens, laptops and t-shirt offers while on campus. Credit companies prey on college students who are anxious to spend money, have not developed any money habits, and are generally naïve as to how credit cards work. Eighteen-year-old students often view credit cards as free money, which the lenders count on. The more students charge, the more likely they will incur late fees, maintain balances on high-interest credit cards and pay the minimum payment, keeping them as debt-accumulating customers for years to come.

What to Look for When Choosing a Credit Card in College

Not all credit card offers are created equal. When picking your first credit card, make sure it is a major credit card, such as a Visa or Mastercard. As a young adult with little or no credit history, you should be able to get approved for a credit card with a annual percentage rate (APR) in the mid-teens. This is the rate you are charged for any credit card balances that you carry, or don’t pay off in full the previous month.

Although you can find an offer for 0% APR for the first 6 - 12 months, don’t take this as an invitation to go on a spending spree. Do take advantage of credit cards that offer rewards programs, such as AMEX Blue Cash, which offers 5% cash back on purchases. Over the course of time you can earn some extra money, travel points or other nice gifts.

Your credit card should not have any annual fees, and make sure there is a grace period for your payments. While cramming for finals, you may forget to drop a check in the mail to pay your balance. If your credit card has a 20 day grace period, you’re in the clear.

What to be Look out for with Credit Cards

While credit cards can bail you out in an emergency and help you establish a good credit history, watch out for these pitfalls:

• You’re a Target: Generally speaking, college students are irresponsible with money, have no experience with paying their bills and managing finances, and will do anything for a free t-shirt.
• Never Take a Cash Advance: Cash advances on your credit card are deadly. The interest charges you will incur will kill you, and the interests starts accumulating the moment you receive the cash.
• Don’t Overdue It: Maxing out your credit card can actually damage your credit score. Stay below 30% your credit limit in order to establish a good credit history that will build a good credit score. In other words, if you have a $1,000 limit, don’t use more than $300 of your credit.
• Only One Card is Needed: Having multiple credit cards is just a disaster waiting to happen. As a college student there should not be a need to have more than one credit card.

Millionaire Money Habit: Credit cards can be a very helpful tool to help you establish or build credit and assist when you need money in an emergency. It is very easy to fall for the temptation to spend more than can be handled, which is not a good way to start your financial future. Only spend what you can afford and only charge what you intend to repay in full when you bill is due at the end of the month. -RT