Does a college student need a credit card? Better yet, should a college student apply for a credit card?
We all know that new credit card laws have made it more difficult for college students to obtain a student credit card. Now college students (and anyone that signs for them) need to think twice before getting that first credit.
There are many responsible credit card usage tips that college students can follow. On the flip side, there are also many college students that will fall victim to the credit card debt trap at an early age.
The question that I often receive in some shape or form is- should a college student have a credit card?
My answer is simple- all college students should have a credit card.
Before a mob of parents runs after me with blazing torches, allow me to explain myself.
1. Build your credit rating. When you make your first major purchase, whether it be a car or home, you will realize that one thing is very important- your credit score. This number makes a world of a difference. Before you do anything else you need to read about the importance of a credit rating.
The earlier you get a credit card the early you can build your credit rating. Yes I do realize the flip side here but please bare with me and continue reading for now.
Your credit rating becomes very important as you graduate from college and progress through your 20s. If you begin building up your credit at an early age you’ll notice some big wins.
2. Reap the benefits of a high credit score in your adult years. A high credit score can save you a boatload of money over the period of a loan. A high credit score means that you have good credit. Good credit means that lenders feel it’s less of a risk to loan you money. Since it’s less risky to loan you money, you can receive a lower rate on major purchases when they happen, and believe me they will happen.
A lower rate may not seem like a big deal now, but trust me it will be one day. Unless you buy your first new car or first home with 100% cash, you’re likely going to have to apply for a loan. You don’t want to be in your 30s kicking yourself in the butt for messing up your credit or for having no credit.
3. Get used to a credit card. Chances are very high that you’re going to have to deal with a credit card for the rest of your life. There are adults that refuse to possess a credit card or are vehemently against credit cards (see: Adam Baker or Matt Jabs), but it’s fairly rare to not have a credit card.
Cutting up your credit cards is too simple and it won’t solve the problem. You should get into the habit of using a credit card and paying it off monthly ASAP.
Okay now let’s go a bit further- what if you think the reasons for having a credit card are decent but you’re still not fully convinced on student credit cards? A college student should only have a credit card under the following conditions:
1. It’s a student credit card with a minuscule limit. A couple of hundred bucks to $500 max! Until you’ve mastered your financial situation completely you shouldn’t accept anything over $500. A high amount of credit available to you can be very beneficial, but it can also ruin you financially if you don’t control yourself. All college students should start off with the lowest limit possible and not increase it until income grows. On top of that, it’s also becoming more difficult for college students to get more than $500 worth of credit.
2. The student credit card is used for reoccurring monthly expenses. I’ve automated my credit card to pay for my gym membership, cell phone bill, and a few online subscriptions (I swear it’s not porn!). A simple way to build your credit without buying useless junk is to automate reoccurring monthly expenses to your credit card. We all have monthly expenses. So why not simplify your financial situation and automate your monthly expenses with your credit card?
3. The credit card is only used in emergencies. Yes I know that some will view an “emergency” as seeing a pair of jeans on sale at Banana Republic. This is where the $500 limit comes into play. Even if you lose control and splurge, you won’t go bankrupt because of it. You’ll probably have to suck it up and get an extra job to pay the credit card off, but you won’t destroy your finances.
A credit card is also extremely critical in real emergencies. Shit will happen in life. There will be times when you need money to pay your way out of trouble. Whether it be paying for a tow truck while stuck on the side of the road in the winter to having your flight delayed. Hopefully this sort of thing doesn’t happen to you. But if it does you can use your credit card and then pay it off with your emergency fund money when you get home
Thursday, July 22, 2010
Student Credit Cards ? Great or Awful Idea?
Wednesday, July 21, 2010
Student Credit Cards FAQ
Student credit cards can be a great way to start a student down the path of financial independence and becoming a responsible adult. Many parents of students decide to open up credit card accounts for their children or to add them to their own personal accounts. But, another great option is to help the young adult get his or her own personal student credit card.
Why Should I Get a Student Credit Card?
Since a student credit card is in the young adult’s name, it helps to start building credit. The longer a person’s credit history, the better his or her credit score. Therefore, the earlier a person can start building that credit history, the better. Conversely, college student with access to his or her parent’s account can adversely affect the parent’s credit rating if large debts are accumulated. So, not only do credit cards for college students help them build a credit history and learn financial responsibility, it also protects the parents.
Why do Credit Card Companies Offer Special Student Credit Cards?
Obtaining your first credit card can be difficult, particularly if you want to get a decent APR. Credit card companies realize the value of a college education and assume that a student with limited credit history is more likely to responsible with paying back credit card debt than a person who is not working toward a solid future. In addition, student credit cards are a great investment for credit card companies because many people tend to feel a sense of loyalty toward their first credit card. Therefore, credit card companies are hoping to establish a long term relationship with students by being their first card.
Do Student Credit Cards Have Benefits?
Besides the inherent benefits of teaching the student responsibility, many do have additional benefits. Some do have rewards programs and cash back programs. Yet others provide discounts in places that are meaningful to students, such as bookstores. Not all credit cards for college students have these benefits, however, so it is important to compare all of the cards closely before deciding which one you want.
What are the Different Kinds of Student Credit Cards?
When it comes to credit cards for college students, you have two main options: secured or unsecured. Secured credit cards for college students are ones that money is paid up front in order to use, which makes these cards more like debit cards. Many college students and their parents prefer this type of card because it is still in the student’s name, it is reported to the credit bureaus, and the parents can provide the young adult with a regular “allowance.” In addition, there is no chance of building up a terrible debt with a secured credit card because a line of credit is not extended.
Unsecured student credit cards are like traditional credit cards in that a line of credit is extended to the student. These cards offer more freedom because payments do not have to be made up front. They are also convenient for the college student if he or she requires loans to help get through school. On the other hand, these student credit cards need to be monitored closely to ensure the student does not get into a debt that is impossible to overcome.
Are There Any Differences Between Student Credit Cards and Traditional Cards?
Sometimes, a guardian needs to co-sign for a student credit card, which is not the case with traditional credit cards. In addition, student credit cards generally offer a lower credit limit than other cards. Often, these credit limits can be as low as just $500 or $1,00. Student credit cards also can have higher interest rates than traditional credit cards, though not necessarily higher than the APRs on other credit cards geared toward those with a limited credit history.
Pros and Cons of Secured Student Credit Cards
Many college, and even high school, students have a need for carrying a credit card. Often, however, these students are not yet financially responsible for themselves and still rely on their parents to help take care of their financial responsibilities. Therefore, secured student credit cards may be a great option for parents with children who are still in school. Nonetheless, the need to weighed in order to determine if they are the right choice for you.
Pro: Secured Student Credit Cards Allow You to Monitor Spending
Secured credit cards are different from traditional credit cards in that you put funds on the credit card ahead of time. Therefore, the only money that is spent with the card is the money that is put on to it. In other words, a line of credit is not extended. Therefore, you don’t have to worry about your child creating a humongous debt that you have to pay for.
In addition to preventing your child from going into debt, a secured student credit card also allows you to set your child up with an allowance. You can determine how much money you want to give your child to spend each month and you deposit the money onto the card. Depositing money onto these cards is easy. You can set it up so that a portion of your check is deposited onto the credit card each payday. Or, you can send money to the credit card company or deposit the money at select locations. This makes it much easier to get money to your child quickly if needed.
Con: Secured Student Credit Cards have a Number of Associated Fees
Although secured student credit cards allow you to monitor your child’s spending habits, there are a number of fees associated with these guards. Generally, there is a fee to set the account up in the first place. Often, there are also annual fees and even monthly fees. In addition, each time you deposit money onto the card, you are usually assessed a small fee. All of these fees add up and can make the student credit card quite costly. Of course, these costs are still less then paying late fees or paying a large debt incurred with a line of credit.
Pro: Secured Student Credit Cards Provide Freedom and Flexibility
One of the best pros of credit cards for college students or high school students is that they allow your child to have the freedom and flexibility that is part of being a credit card holder. These cards do not look any different from traditional credit cards and are accepted at all of the same places. Therefore, your child can use the secured student credit card to purchases necessary items without having to ask you for it or making you have to go out and buy the item.
This is particularly helpful for college students when it comes to purchasing books and other school supplies, as the college may be located pretty far away from home. This makes it highly impractical for you to come to the school to make purchases for your child. Similarly, sending checks can take too long and can make your college student late in purchasing items he or she needs for school.
Pro: Secured Student Credit Cards Teach your Child Financial Responsibility
One of the best perks of a secured student credit card is that it starts your child down the road of financial responsibility. When you deposit money onto the card, your child has to learn how to responsibly use the money provided. In addition, most secured student credit cards report to credit bureaus, and the report will be in your child’s name. This helps to build a credit history for your child, which will make it easier for him or her to acquire loans or other credit cards in the future. Before applying for a card, however, make sure it does report to these bureaus in order to receive this added benefit.
Tuesday, July 20, 2010
Prepaid Student Credit Cards and How They Work
Often, students do not have credit records. This makes it difficult for them to obtain credit cards. In addition, if they are able to obtain, the credit limit is low or interest rates charged are high. At such times, prepaid student credit card is the best option, as it provides flexibility of a credit card and avoids accumulating debts at the same time.
No credit checks or monthly installments are required to obtain such type of credit card. The amount transferred to a prepaid credit card determines the spending limit. You can obtain such a credit card online or from a financial institution.
Uses and Benefits:
You can use this credit card wherever normal credit cards are accepted. If credit balance on the card is low, students can refill them at any time. Methods to refill these cards are through cash or check. Some card issuers also accept automatic account loading on a monthly basis.
With normal credit cards, you are not aware of the amount available on the card. Sometimes, dealers may take a small amount first and charge the full amount later. As a result, an overlimit fee is charged, which results in negative balance.
Hence, students need to monitor their credit balance and transactions on their credit cards, as they have to pay the negative balance. This also helps them to beware about financial stability and budgeting at a young age.
Benefits:
Some prepaid student credit cards allow students to build their credit history. You can apply for such a prepaid credit card, if you have a social security number. Social security number plays an important role in applying for this type of credit card. As a result, they are reported to credit bureau agencies. You need to maintain a positive credit history by keeping the card active and avoiding negative balances. Good credit records help students to get credit cards with lower rate of interest and in getting finances such as loans and mortgages.
Prepaid student cards provide students the flexibility of using credit cards without worrying about card debts. Students learn to maintain economic constancy and develop positive credit history with the help of these cards.
These credit cards function in the same manner as normal credit cards do. You can buy goods and services from different locations with these cards. They look and act as a normal card and are very similar to debit cards. You have to put some money in a pre-determined bank account to make use of these cards. If you fail to put money on the card, you will not be able to use the card.
Other Points To Remember:
Minors, who are unable to obtain cards, can get these types of credit cards. Usually, teenagers use prepaid student credit cards the most to build credit history, while studying.
Some disadvantages of these cards are:
1. There is a monthly convenience fee.
2. You have to pay an interest fee.
3. You do not get a credit.
5. They make it difficult to shop with a low interest rate.
Get Student Credit Cards for Extra College Expenses
There have been lately offers for students that feature specially designed credit card packaged for college students. These credit cards offer a combination of financing, flexibility, security and control so student can feel comfortable about managing their finances and at the same time obtaining the benefits that credit cards provide.
With student credit cards you will be able to afford extra college expenses that are not directly related to the studies but have incidence on college life, like purchasing groceries, paying for college material (books, electronic equipment, etc.) and many other expenses that can not be faced with regular student loans due to the fact that they do not fall on the college expenses category.
Student Credit Cards Explained
Student credit cards are specially designed for students. There are secured credit cards which can provide some control over the expenses and prevent debt accumulation because the credit card holder needs to make a deposit into an associated account and only then he can use the credit card up to the deposit’s limit. The deposit works just like a guarantee of repayment.
Unsecured credit cards are also available however and provide different benefits for students. Credit limits may be lower than regular credit cards, but they provide promotional interest rates and other advantages like agreements with certain stores where most students purchase goods and services.
Financing And Flexibility
These credit cards are specially made to meet student needs that due to the type of expenses that college implies need financing and flexibility. There are certain months where book and studying material purchases will raise expenses, others where entertainment and vacations raise expenses and other months where expenses are reduced and remain on a normal level. Without financing there would be a lot of discipline and saving capacity needed to cope with this situation.
Instead, student credit cards will provide you with the ability to purchase anything you need and distribute payments along the year in an even way so as to avoid compromising your income too much. These cards also allow parents to exercise some control and review over their children financial and credit behavior.
Security And Control
Both for students and their parents, credit cards provide a fantastic tool to control the expenses so as to analyze credit and financial problems that college life may imply. Also they provide security in case of accidents or unexpected expenses as they provide financing when cash is not available. Thus, student credit cards are a must for college life and if used correctly they will not imply costs to the student or his parents.
Nevertheless, when applying for a student credit card, you should not go for the first offer you receive as there are many financial institutions competing in the credit card market and offering different credit card products with varied benefits. Just do a quick search on the net for different credit cards and compare what the credit card issuers have to offer you. Only apply once you have decided which offer best suits your needs because by doing so you will make sure to get the most out of your student credit card.
Student Credit Cards
The credit card business has spread to cater every section of society world-wide. Normally, companies target people who have the means to personally repay the unpaid money balance. Students have been allowed this facility, even if they are not earning. are getting popular with students in America. At that stage of their life most of the students are usually unemployed. But, they do have to incur certain expenditure on tuition fee, books, projects and more. They can tide over emergency expenses with a credit card and need not wait while their parents transfer money. are easy to come by, but the interest rates are higher than normal. For that matter, late payment fee is higher and credit limits lower. Parents guarantee payment of unpaid amounts and pay off the credit bills. If a student gets into the bad habit of over-spending he will be sowing seeds of a poor credit rating, which can hamper his credit as an adult. But, a credit card is a wonderful tool to inculcate in your child the virtues of planned spending. That way he grows up to be responsible for his expenses and keep his credit rating intact by building a good credit card history.As holders of credit cards, students are entitled to all rights and liabilities that come with credit cards. The Fair Credit Billing Act is applicable to each type of a credit card. are no exception and students can be even be punished or charged for any unauthorized use of their charge account or for any billing errors of their account. In conclusion, students may be advised to use their credit cards most responsibly and judiciously to avoid falling in a debt trap.CASH BACK CREDIT CARDSCash back credit cards offer a 1% rebate on every purchase you make. You may also get gifts for the shopping you do on your cash back credit card. Most big companies offer cash back credit cards to selected customers only. Persons, with a good credit report or clean credit history are most sought after. In case you hold a cash back credit card it means that you are not bankrupt; nor do you have any unpaid bills. Most of the cash back credit cards are generally offered to those who have a credit score of 700 or better, other than a clean credit history. Some insurance companies prefer dealing with customers holding cash back credit cards. You may even have your loans easily processed by banks. However, be warned that such cards have inherent high rate of interest. It means that the benefits you derive can easily be offset by the high interest you may pay on monthly unpaid balance.Use your credit line judiciously. Many card users have, unfortunately started using credit cards as a principal means to support them, whereas credit cards are meant to help you when you fall short on cash. With high rates of interest, the unpaid amount escalates beyond one’s paying power. Credit cards are debt traps, if used injudiciously. Young people are getting attracted to credit cards and their whole perception of money spending changes. They start perceiving credit as free money. Credit cards charge heavy interest on out standings and before a card holder realizes he is caught in a debt trap. He tries to get out of this situation by getting more cards and transferring the balance to the new card. It might give him temporary relief, but it causes untold harm to his credit rating.
Monday, July 19, 2010
Student Credit Cards Help Kids Build Credit History
Student credit cards can help kids build their credit history. A student credit card is available to kids in college and offers a number of benefits to customers. Kids can build their credit history and improve their credit score with help from a student credit card.
Teach Kids About Responsible Credit Card Use
Parents need to work with kids to teach them how to use credit cards responsibly. Experian and USA TODAY surveyed college students in 2006 and found that more than 25% of college graduates surveyed delayed buying a home, 14% waited to have kids and 11% delayed marriage because of credit card and loan debt. Ordering children’s free credit reports are a great way to get the conversation started. Parents should share their credit histories with their kids and have open discussions about the responsible use of credit cards and debt.
Warn Kids About the Risk of Identity Theft
Kids need to be warned about the risk of identity theft. According to the Federal Trade Commission, people between the ages of 18 and 29 represent the largest group victimized by identity theft. College students can order their free credit report annually and review it for mistakes. Suspicious items found in credit reports should be immediately reported to the credit bureaus. Kids also need to use caution when throwing away mail to avoid the risk of identity theft . And students should keep all personal and financial information hidden when they are in class.
Build Credit History With a Student Credit Card
Kids can start to build a solid credit history with a student credit card. Kids benefit from student credit cards, designed for the unique needs of college students. Student credit cards include rewards cards, low interest cards and balance transfer cards. Student rewards credit cards give customers cash back or rewards points for purchases. Low interest credit cards and balance transfer credit cards can be used to pay off or reduce high interest credit card debt.
Encourage kids to talk about the credit card offers they receive, and take the time to help them review before they apply.
Students Credit Cards ? Start for Good Credit
Parents always take care of their children: mainly of their safety, health and education. But what about credit card usage? While your child is getting an education at college, think about his or her financial future.
Sometimes parents can not even suppose that their college-age son or daughter has already had a credit card account. If your child is at least 18 years of age, he or she may apply for a credit card even without credit history or with the bad one. And there is no need in a co-signer.
College students and freshmen in particular are considered to be the most trusting and loyal people therefore they are so attractive to credit card companies. Experts say that today many educational institutions use the licensing contracts and make credit cards with school’s colors, mascot or logo more available to youth. In any way credit card companies issue a huge number of cards for students’ convenience and life style.
What are the benefits of student credit cards? You can apply for a credit card even with so little income and without credit history. As you study, probably you don’t have a profitable job or have it at all. And it isn’t necessary because you can still apply for a student card and be approved. Any credit card likes a wise use. Only in this case it can be the right start for good credit and benefits in the future.
Students like any other consumers like to get bonus points and rebates. For example, some student credit cards offer their holders to earn free airline tickets, gift cards or free MTV events. Others allow having 10% discount at the MTV Store in NY and mtvshop.mtv.com or simply getting 3 % rebates on purchases with the card. Alluring? Sure!
The catch among those advantages is higher rates and rather low credit limit. The reason for them is evident. Students belong among the high risk consumers. Credit card companies do not wish to throw away their money and invent special security measures against the risk of repayment. As for low credit limit, it will become higher as soon as a student proves his creditworthiness.
College kids need also to know about the existence of identity theft. Many students fall victims to identity theft very often because they do not check their credit reports. Thieves may use their card information for the purposes and damage credit history without notice. Therefore, parents should educate their children and remind them to check credit report in order to avoid this happening.
Unfortunately, the problem of students’ debts is up-to-date. When students can’t afford to pay back their debts, parents help to overcome the problems using different ways. And that’s right. Your child does not have an income to pay it back and worries about that. Moreover, the devastated credit report will remind him or her of adulthood for many years.
As you see, the credit success of any student depends both on a student himself and the parents. Before applying for a card, think if your child is educated enough and fully realizes that a credit card is not free money. In short, a student credit card has both positives and negatives, but no doubt positives outweigh.
Sunday, July 18, 2010
How To Apply For Student Credit Cards
Student credit cards can be a blessing or a curse depending on how they are used. As long as you don’t spend more than you can afford to, they can provide a financial cushion and help you to establish a good credit rating which will stand you in good stead in the future. If you are a student, you already know that you are faced with a lot of educational expenses that you have to pay for upfront.
If you don’t have the cash to purchase text books or readers you can be seriously disadvantaged in your studies. Even something as simple as being able to put petrol in your car to get to college can be an intermittent problem for students. So having a credit card to fall back on only makes sense.
Many credit card providers offer student credit cards with low available credit and reasonable rates. Some have conditions that automatically reduce your limit if you pay late. So you need to carefully read the terms and conditions before applying. You may qualify for a regular credit card if you have adequate part time income so you don’t need to limit your search to credit cards marketed specifically to students. However, if you lack adequate income for a standard credit card, look for one for students.
As with all credit cards aim for the lowest annual percentage rate, lowest fees and charges, and lowest late payment penalties. You want to keep your monthly credit cards to a reasonable level. Ideally, you will be able to do more than simply make the minimum payment. You will be able to pay off your credit card quickly. It is easy get into a quagmire with credit cards so plan your spending and repayments ahead of time to avoid potential problems.
The quickest and easiest way to find the best value student credit cards is to use the internet. By simply doing an online search you will discover a plethora of possibilities. However, this can still be too much work. An online one-stop credit card website can simplify the process. Instead of searching through hundreds of credit card offers you can use the services of a site that has already done this for you.
These sites then provide a selection of credit cards which offer the best value. You will still need to compare them and look for the most suitable student credit cards for your personal needs but you will be able to do this relatively quickly. Once you have chosen a card you can apply for it on the very same site saving you even more time and trouble.
Student credit cards used sensibly can help you purchase text books or pay for short term expenses until you can pay for them. However, if you are not careful you can end up with a credit card debt burden. If you only buy what you can afford, your credit card will serve you and not the other way around.
Guides to Apply For Student Credit Cards
More and more credit card companies are now issuing student credit cards. A student credit card is a students first experience of handling finances independently and entry into the world of credit card usage. It teaches them how to spend and how to save. Credit cards are issued to students only after one of their parents signs their consent. This is also done to keep track of the credit card holder and ensure returns on time.
You can apply for your student’s credit card as soon as you become 18 years old. To apply for a students credit card first of all you will have to fill out a form of that company or bank whose credit card you wish to apply for. To get more information about various companies that offer credit cards, visit their websites and study their terms and policies well. Also take a good look at all the facilities that they claim to provide you with. If in doubt seek the help of an elder who has already been using credit cards. Different companies have come up with their different schemes to lure customers. Go through all these schemes carefully and also go through their terms and conditions like last date of making payment and so on. When you have decided on a company or bank, go visit them in their office and apply.
To apply for a student credit card you must be above 18 yrs of age, must be a resident of United States and must have a valid social security number. To apply for a students credit card you will have to first of all fill out an application form providing details about yourself, your place of residence, your vehicle information and so on. You also have to provide your bank account information so make sure you have a personal bank account when you apply for a students credit card. The bank will also ask you to add an authorized user so that in case you don’t pay up they will take up your responsibility. Credit card companies have to be extra careful with students as they have no credit history to verify their claim. When you fill out your form, try to answer all the questions as it helps in verification.
You can also apply for your credit card online. All credit card companies use encryption technologies to protect the sensitive information provided by customers so it is perfectly safe to provide your details and make your transactions online. In fact applying online is much more convenient. You will get your credit card within a week or two of applying depending on your company. When you get your credit card you can use it for making purchases, paying your bills and much more. Make sure you pay back in time otherwise the interests could mount up and cause problems for you. So make sure you use your credit card carefully and always remember to keep your credit card number a secret.
Friday, July 16, 2010
How to Compare Student Credit Cards
The popularity of student credit cards has never been higher than in this, the age of the plastic generation. For students, whether new users or old pros, a credit card can be a blessing or a curse. However, good credit sense and a little knowledge on how to find the best card for you go a long way in ensuring that students do not get cards that are too expensive for their purposes.
A student credit card is a card designed especially for students, that is, high school and college/university attendees. These cards are like any other credit card except that they tend to have more restrictions than regular credit cards. Some of these cards have to be co-signed by an authorizing adult, normally a parent or guardian.
As with most credit cards, comparing student’s credit cards encompasses looking at some key features of the card. Selecting a card after looking at these components will then depend on why you need a credit card.
Student credit cards generally tend to attract a higher rate of interest, APR (Annual Percentage Rate), because students do not have credit ratings and the banks need to cover themselves against losses. As such, this is the main feature to use when comparing student’s credit cards. Therefore, which card has the best APR rates is oftentimes going to be the determining factor. Look for cards with 0 APR introductory APR for starters.
These cards also have lower credit limits in general. If maximizing available credit is the main aim of getting a student’s credit card, then cards must be compared based on how much credit is given.
Rewards – which student does not like getting a prize, something for free that they can actually use. Comparing rewards that can be redeemed for cash, gift certificates and travel miles are very useful to students.
Lastly, since students are creating a credit history, look for cards that can help you do that by sending your credit information to various credit agencies.