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It is important not to build up any unnecessary debt while in college, as this can only complicate things once it is time to start repaying your loans. However, this does not mean it is a bad idea to start building credit. You can actually use your college loans to help you build this credit, making it easier to refinance them at a lower interest later.
Many student credit cards have higher interest rates then you might like. If you use a credit card wisely it will not be a problem. A good way to keep tabs on your student loans while in school and build credit at the same time is to use a credit card to send payments to your loan provider.
Even if it is just a small payment to cover some of the interest accruing on your federal unsubsidized loans, this still helps. Make a $50 payment to your lender with your new student credit card. Wait a week or two, and then before any interest builds up on your card, pay off the $50. Bit by bit, you are reducing the amount you must pay back after you graduate and building a strong base for a good credit score.
Never use the card to make a loan payment larger than you are able to pay off in the same billing cycle. Also, to avoid temptation or the chance of using the card on a whim, don't carry it with you. Leave it in a safe place in your room and only use it to make these unsubsidized loan payments. This way you are less likely to build unnecessary debt.
|Jennifer Mathes, Ph.D.|