As my son starts thinking about college and what he thinks it will be like, he mentioned how excited he is about having a credit card. The way he talked about it was so familiar. It’s because I think he views credit cards the same way I did when I first went away.
Credit cards are not free money. This year I finally paid off my last credit card that I got in college. At the time I used credit cards for things like school supplies and utilities (when I didn’t have enough to cover costs). Those are fine and understandable expenses. After a while though, I started using my cards for things like going out and having fun. I even took a long trip with one of them (the one I just finally paid off). The trip, with airfare, was $750. After over 20 years of paying off that card, the trip actually ended up costing over $3,000 with all of the accrued interested. That wasn’t free money. That was money at a ridiculously expensive rate.
Yes, you will be tempted, and maybe once in a great while it is fine to use your card for fun, but it should be very infrequent. I would say once a quarter at most.
At this point, a lot of college students are already getting into the habit of using those cards. Whether yours is brand new or you have had one several years, here is what you can do to veer away from relying on it.
Set up a PIMYU account and start tracking all of your expenses. The most important part is to identify how you are paying for everything. If you are using a credit card or a student loan to go out to eat, you need to start paying attention to just how much you are blowing on it every month. Take the time to do an analysis and pull a couple of reports. Once you become aware of exactly how often and how much you are putting on your cards, you will be more inclined to scale back. It will also help you from the terrible shock from an incredibly high balance that you should have known was coming.