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Common Credit Card Mistakes College Students Should Avoid

Last Updated: March 7, 2024
4 min read

Key Points:

  1. Excessive credit card usage can result in overwhelming debt and financial instability for college students.

  2. Forgetting to pay credit card bills on time can lead to late fees and higher interest rates, so setting up automated payments or using reminder apps is essential.

  3. Spending beyond one's means can be avoided by practicing responsible spending habits and using a secured card to build a credit history.1

So, you’ve made it to college and you’re finally enjoying your first taste of freedom. Congrats! With all that freedom comes some newfound responsibilities, too — should you stay up late hanging out with your new friends, or head home early and study for that exam? Do you want to splurge on a cute new sweater? Pizza or salad? Sometimes it’s not easy to make the “right” decision.

Thankfully, when it comes to credit cards, we can offer some help in your decision-making process. College should be filled with all sorts of new opportunities — but credit card debt shouldn’t be one of them. Check out some of the most common credit card mistakes you can make as a college student and how to avoid them.

Forgetting to pay your monthly bill on time

A missed payment could result in late fees and higher interest rates, according to the Consumer Financial Protection Bureau. One way to steer clear of this pitfall is to set up automatic payments through your card issuer (Discover card has a DirectPay option). Some credit card companies may offer an app that allows you to set up alerts to track when payment due dates are approaching. Your credit card issuer may provide a similar service. The Discover Mobile App, for example, allows you to set a reminder for when your statement is available, when a payment is due and/or when a payment has gone through.

Spending more than you have

The impulse to spend more than you have can be hard to resist, but ultimately great for your financial health. Excess credit card usage should be avoided by college graduates for several important reasons. Firstly, relying too heavily on credit cards can result in excess credit card debt that can be challenging to overcome. Starting a new career with limited income already brings financial uncertainties, and piling up credit card debt only adds more stress. Developing responsible financial habits early on is crucial for long-term financial stability.

Secondly, excessive credit card usage can impact your credit score. Your credit utilization makes up 30% of your credit score. A poor credit score can make it difficult to secure loans or favorable interest rates in the future, hindering important financial milestones such as buying a car or a home. By using credit cards responsibly, college students can maintain a good credit score and establish themselves as reliable borrowers, setting a strong foundation for their financial future.

Did you know?

A secured credit card may limit the amount you can spend because your credit limit to a security deposit. This option offers the card issuer built-in protection from a cardholder who might default on a payment.

It is not uncommon for those who are new to credit to get a secured credit card, because they don’t have enough credit history for lenders to assess how they are at paying bills on time. The Discover it® Secured Credit Card is a great credit card that can be used to build your credit history1 if you use your card responsibly and pay at least your minimum balance every month.

Avoiding your card altogether

The instinct to pretend your card doesn’t exist may come from a responsible place — i.e., you don’t want to find yourself buried under a mountain of debt. But one of the points of having a credit card is to build credit history — which you do by showing your ability to borrow and repay money. You won’t do a good job of that by letting your card collect dust. If it makes you more comfortable, consider the aforementioned secured card, or open a student credit card account that provides guidance for a new cardholder.

The Discover it® Student credit card, for example, helps members track spending and makes paying bills simple through the Discover Mobile App. Plus, there are incentives for using the card: you can earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, you earn unlimited 1% cash back on all other purchases—automatically. To maintain a balance between building a credit history and overusing your card, consider using your card for set purchases each month, like gas or groceries. That way, you’re still building credit while keeping your monthly bill manageable.

Opening multiple accounts

You might find multiple card offers enticing — especially when your favorite retailers offer a hefty discount just for signing up. But it’s important to stay strong in the face of a one-time 30-percent discount on some jeans! It’s usually best to stick with just one card when you’re starting out; that way you can more easily track your spending and develop smart credit habits. If you do decide to open another account, particularly with a retailer, be aware of the interest rates and plan to pay your balance if in full and on time, if possible.

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  1. Build Credit History (Student Card): Discover reports your credit history to the three major credit bureaus so it can help build your credit if used responsibly. Late payments, delinquencies or other derogatory activity with your credit card accounts and loans may adversely impact your ability to build credit.
  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.