Student credit: How many student credit cards do you need?

Student credit: How many student credit cards do you need?

There is no simply way of answering that question. We all have different preferences and different financial situation and what is right for you might not be right for someone else. As a student, it is however usually advisable to keep the number of credit cards down. Surveys have shown that Americans generally have 5-10 credit cards, but that quite a few people in this land actually carry more than 50 different credit cards. If you want to get a credit card during your school years in order to start building a credit history, there is however no real reason for you to have more than one or two credit cards. It might be tempting to accept all kinds of offers from the credit card companies. Several companies market themselves quite heavily in campus areas or during events that they know will be visited by a lot of students. Applying for a student credit card just because you are handed a t-shirt or promised a low introductory interest rate is however not a good idea.

Many students think that the more credit you have, the better. The fact that so many credit card companies trust you and provide you with student credit cards and high spending limits must give you a great credit score, mustn’t it? The truth is however quite the opposite. It is correct that having one or a few student credit cards and using them responsibly will increase your credit score more than having no student credit card at all, but having too many credit cards can actually decrease your credit score. A person with many credit cards poses a bigger risk to the lender, since a person with plenty of credit cards can quickly be heavily buried in debts. The same is true for high spending limits. If you have high “open” credits you are capable of rapidly using up a lot of money and will therefore pose a higher risk to the creditor, even if you never intend to use your full credit.

For you as a student, it is therefore advisable to choose a minimum amount of student credit cards and sticking to them. A good rule of thumb for employed adults is to have between two and six credit cards. A student should ideally limit the amount to two cards rather than six. Moving away from home and managing your own budget is a large step, and with just one or two student credit cards it will be much easier for you to keep control over your economy. Try to be accepted by a major credit card company, such as MasterCard, Visa or American Express, since you will be able to use these cards for many different types of transactions. Most merchants will accept major credit cards. If you are not issued a student credit card from any of the major credit card companies, it can be a good idea to apply for a store credit card. A store credit card will help you gain some credit history and a well managed store credit card can make your eligible for a major credit card in the future.

Even if you are issued a student credit card from any of the major credit card companies, an extra student credit card from a store where you frequently shop can be a good choice. If your store offers you coupons, bonus points or special discounts when you shop with their credit card you can actually save quite a lot of money, as long as you pay of your full debt each month. If you do not pay in full each month, the interest will soon add up to more money than you are able to save by using the store credit card. Limit your self to one store where you frequently shop. Exactly how your credit score is calculated by the credit card companies is unknown, but many consumer advisers claim that each store credit card will deduct a few points from your credit score. This is because store credit cards are often issued to people who are unable to get credit any other way, and having a lot of store credit cards will therefore make you look suspicious in the eyes of the creditors. Applying for just one store credit card will however not have any dramatic effects on your credit score. As a matter of fact, a store credit card is often the first step for students to build any credit score at all.

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