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Do's and Don'ts on credit card for students!

Tuesday, September 10, 2013 by Rajiv Raj

cc127n27They offer it to students as an add-on card or a secured card (a credit card issued against an FD). Now credit card is a tricky instrument. If used well, it can bring a whole host of benefits, but if misused it can put you in trouble.

Here is a list of Do's and Don'ts for students who use credit cards:

  • Never delay your payments: Of course you do not have control over repayments when you have an add-on card, but if you have a secured credit card, the onus is totally on you for repayment. It is very important to build a credible credit history right from the beginning. It not only makes you loan attractive, but also disciplines you financially. You also get an advantage to build a strong Cibil Score very early on in your career. 
  • Pay your dues in full: It is very attractive to pay minimum amount due. It is also light on pocket. But remember it is a temporary phase. It will all come back to you many times more. So make sure you pay the entire amount due and not minimum amount due.
  • Keep your payment records safe: You never know when you will need them. There may be errors while calculating the payments.
  • Keep a tab on your credit history: We at often educate people that they should keep checking their credit score regularly. This enables an individual to be aware about the fact that there are no problems on their credit score so that they are loan attractive all the while.
  • Restrict your credit cards to just one or two: Just because the credit card companies call you to offer a card, do not keep applying for them. Manage your cards well. Just have one or two and stick to them.
  • Keep your credit utilization low: If your credit card has a limit of Rs 1 lakh, do not spend the entire limit. It is always advantageous to the card utilization less than 30 per cent.
MadanRajiv Raj

Rajiv is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India’s first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.

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