What students should know when they choose their first credit card.

"With great power comes great responsibility.” This holds true when you have a credit card between your fingers.  That piece of PVC plastic has the power to get you a new smart TV, but it also has the power to indebt you unimaginably. Not only should you responsibly use of it, but there are some things you should know. 

If you are a student and you are about to choose your first credit card, the following are things you should know.

Difference between a credit and a debit card

A debit card takes money from a bank account.  A credit card is a short-term loan that may or may not accrue interest. This will depend on whether you pay on time or not. 

Why should you get a credit card?

Probably the most important benefit of a credit card is the fact that it helps you build good credit. This will help you in the future by getting a loan at a favorable rate, avoid utility deposits, and get lower insurance premiums.  

But these are not the only benefits.  Some cards have shopping or traveling privileges that will save you money.  You can also get extended warranties, purchase protection, price protection, car rentals, and more. Some cards allow the use with monthly fees for 6, 12, or even 18 months with no interest. 

Credit card interest

The interest generated if you do not pay the entire balance each month will depend on your bank’s policies. Know the card's annual percentage rate regarding interest. The truth is that you should always try to pay your full monthly balance. The minimum payment is enough to keep you in good standing but this should be avoided altogether. 

Credit cards affect your credit score

The financial world has credit bureaus that collect credit history. Your credit card can either affect you positively or negatively depending on how you use it.  The most important factor affecting your score is your payment history, which you would be advised to keeping it at 100% by always making your payments on time.