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updated 6/5/2005 6:51:01 PM ET 2005-06-05T22:51:01

Now that you're about to graduate from college, it's time to shed your Che Guevara T-shirt, put down that collection of bad poetry and think about living in the real world.

For most, that means establishing credit and using it wisely.

"Many college grads don't develop a budget and live within their means," says Rosetta Jones, vice president for Visa USA in Charlotte, N.C. "Having a budget is vital."

Click here for seven things you need to know about using credit wisely.

A credit card isn't free money. Think of it as an unsecured loan from the bank that allows you to buy now and pay later. If you're smart, you'll pay the balance in full each month and use the bank's money interest-free.

But many recent grads aren't smart and pile up a huge balance on their credit card. Don't do it. Check the interest rate — often about 20 percent — and do the math. The TV or clothes you bought on sale get expensive in a hurry if you get whacked by an interest charge each month.

A credit card offers several advantages: It's more convenient than writing checks, you don't have to carry large amounts of cash, you can consolidate payments and you have a record of all purchases.

If a bank has turned you down for a credit card, consider securing credit from a local or regional merchant. Use it wisely to establish a history of on-time payments. This will strengthen your application when you reapply to a major bank in a year or so.

A secured credit card can be used in the same way. Typically, credit is secured by a savings account at the bank issuing the credit card.

If all else fails, ask your parents to co-sign the credit-card account. This means that your parents guarantee to pay the charges if you don't. You can use the account to establish a record of on-time payments and build your credit history.

The Web sites of major banks also offer solid information about how to establish and use credit wisely, including Wells Fargo, JPMorgan Chase, Bank of America and Citigroup.

Now that you're a college graduate, banks see you as a valuable customer because you're likely to earn a good salary in the future and you're a prime candidate for other services, such as car and home loans or money market funds and CDs.

The bank wants your business, so make them earn it. Shop around for the best deal.

"When shopping for a financial relationship, it's important to ask the right questions," Jones says. "Ask about what you'll need — checking, a debit card and savings to put into a money market account — and make sure the financial institution offers exactly what you're looking for."

© 2012 Forbes.com

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Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.91%
$30K home equity loan FICO 5.20%
$75K home equity loan FICO 4.57%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.40%
Cash Back Cards 17.92%
17.92%
Rewards Cards 17.13%
17.12%
Source: Bankrate.com