College Students: Do You Know These 4 Credit Card Tips??

You've seen them at sporting events, on university campuses, and at your favourite summer music festivals. They come with promises of duffle bags, t-shirts and chances to win free trips — anything to lure you to sign on that dotted line.

That's right — we're talking about the credit card companies. And if you're over the age of 18, chances are they're after you, whether you're interested in them or not.

The pros and cons of credit

Depending on how you look at them, credit cards can be very scary — or liberating — pieces of plastic. On the one hand, you finally have a tool that will allow you to purchase concert tickets online, reserve a hotel room, and build a credit history — something that will inevitably come in handy when it's time to lease a car or buy a home down the road.

On the other hand, when you're a starving student with little income coming in, having any amount of high interest credit at your disposal can be dangerous. It can be tempting to use it for shopping sprees, nights out, and take-out food that you otherwise wouldn't be able to afford.

The truth is, debt can build up fast and many students are unprepared for the responsibilities associated with credit cards before signing up for them. A few unexpected, and unaffordable, charges can quickly add up. If you don't have the money to pay for them, you can severely damage your credit rating.

That's why it's important to have a plan when applying for your first credit card — and stick to it. Here are 4 tips every college student should know before filling out that first credit card application.

#1 - Determine that you really do need a credit card

Sure, that Toronto Blue Jays duffle bag would be cool to take to the gym, but it shouldn't be the only reason you sign up for a credit card. Sit down and think about why you need one ("need" being the operative word here). For emergency purposes? To purchase plane tickets? To rent a car? Jot down the top reasons you would use the card, and use it solely for those purposes.

#2 - Choose the right card

While the free gifts and incentives might be nice to have, they're often not worth the high interest rates. Many banks are now offering low-interest student cards; Instead of paying 18% or higher on an unpaid balance, you pay around 11%. These cards often come with an annual fee of around $35, but if you're at risk of leaving your balance unpaid from month to month, you could be saving much more money in the long run.

Of course, if you're disciplined and pay your balance off completely, the interest rate doesn't really matter. In these cases, you might want to consider a card that rewards you with something you actually need, like free groceries.

#3 - Decide on a limit you're comfortable with

While student credit limits typically start low (around $500), they will gradually increase if you pay your bills on time. This can be a good thing or a bad thing, again depending on your level of discipline. To establish a strong credit score, you should never use more than one third of your total credit card balance. If you're going above that, or if you're feeling tempted to max out your card, you might want to ask the credit card company to reduce your available credit.

#4 - Avoid overuse

Train yourself to use your credit card as a last resort. If you don't have the money in the bank to cover a charge — and nothing is expected to come in within the next month — think twice before pulling out the plastic.

Many established, employed adults have problems handling the responsibilities associated with credit cards. By taking a prudent approach with your first card and developing good credit habits, you'll not only be establishing a strong credit rating, but you'll be setting yourself up for success in the years to come.