Finance Tips

Today, credit card is playing important part on every transaction. You can shop for merchandise and pay it with your card. It’s that simple. It is not only for people that already have a job but also for high school and college students. Student credit card have the same features as a traditional one, but they do come with certain strict requirements that other cards do not have it. Most credit card companies will need a co-signer as collateral or a form of insurance before they release a card for the student. This is to be believed as a back up and a peace of mind for the issuer if something goes wrong with the payment.

The student credit card interest rate or APR is usually higher than regular one. This is to minimize the risk for the company. The limit is also ranging from $250 – $800. This is very common because most students have not established any credit history. Even though the limit is very low but it still helps students build a credit. A student credit card can be used as a stepping stone to build credit and establish a good credit history. If you can manage your using of the card then you have a chance to get high credit card rating and this is in turn will allow you to get higher loans in the future.

On the other side, if students spend more money with their card, sooner they will be incapable to pay the bill which will affect their credit rating. If the issuer goes after the co-signer to pay the bill, it will also affect co-signer’s credit rating as well. Therefore, students should always aware about their budget before they start using the card.

To summarize, student credit card is good to have. For high school students or college students, this card is a mean of freedom and at the same time also teaches responsibility. It comes in handy during emergencies, which is a good reason to invest in them. If your son or daughter is in school now, you may consider looking into it for them. It will help them to build a credit score which is good for their life in the future.

If you’ve never looked a credit application before, it’s best that you know exactly what’s on that application and how you can apply properly. Whether it’s your first credit card or you’ve just simply forgotten the procedure, this article will guide you through the application process on what you can expect when you fill out your application online.

Before you apply for your first credit card as a student, you must meet the following guidelines, if you don’t meet these guidelines, you may have to apply for another credit card or if you’re under the age of 18, you will have to wait.

- You must be at least 18 years of age. There is no exception to this rule. Credit cards are intended for adults. If you’re not an adult, you can’t apply, it’s the law.

- You must be a valid US citizen with a valid social security number. Credit card companies will check your identity. If something seems fishy, they won’t distribute the card to you. Make sure that you have a valid social security number and that you’re a valid United States citizen.

- You must be in college. The purpose of a student credit card is that it’s designed for college students. If you’re not a student, then you’re not going to get approved. As long as you’re going to college, you’re going to get accepted most likely unless your credit is bad.

If you meet the above requirements, you’re probably ready to start applying for your credit card. Most applications are very similar and ask the same exact question. Overall, there are not that many credit card companies. In fact, there are only four major companies. Below, you can find what to expect on your credit card application.

- Your full name, date of birth, your current residency, and as mentioned above, you will need to supply your social security number.

- Your telephone number along with a valid e-mail address and your current and previous address. If you don’t have a previous address, you can simply leave this blank.

- The college you’re attending, what class you currently fall under (freshman, etc), and the location of the college as well.

- Your job details, how much you make, where the job is located, the company name.

The only difference you’ll see with a student credit card is that they will ask for school information. If you find yourself applying for another type of credit card that isn’t college student related, you will find that they won’t ask for this information. When filling out your credit card application, make sure that you’re completely honest. If the company finds that you’re lying or trying to manipulate their system you may find them sending you a rejection letter and/or they might contact the local authorities, if you find yourself having to lie to get a credit card, simply don’t do it. When you finally receive your credit card, remember to be responsible and safe.

Face it — not all students have the advantage of carrying daddy’s plastic. Credit cards for most students are dangerous. It is important to understand and know how to use credit to your advantage so as not to be caught off guard by skyscraper fees and interest rates at the end of the month. Here are some frequently asked questions regarding college student credit:

1. How many students have credit cards?

Over 80 percent of college students have at least one credit card. More then 50 percent of freshmen carry plastic, and by sophomore year, over 90 percent of the the sophomore population have credit cards. Graduate students are no different, most of them carry as many as six cards. Credit card balance is directly proportional to level of education, with graduate students having the biggest credit card balance due to education expenses among the whole student body population.

2. Why are there so many credit card companies issuing cards for students?

Credit card companies know that when students can not pay their balances, they have the parents save them. They also offer attractive interest rates and benefits to college students because college is the time when most people get their first credit cards. Most people stick to their first credit card even after graduation. So, college students are great customers!

3. Are credit cards bad for college students?

Credit cards should not altogether be avoided by college students because they can help them rent a car and get a good car insurance policy, as well as provide emergency funds. Establishing a good credit history is important and needed after college. It is wise to get a credit card while studying and make sure that the credit card is paid on time. College students should also opt for one or two low-limit cards. Using such will be easier for the student to stay within his or her budget and afford to pay the bills on time.

4. What happens when a student cannot afford to pay on time?

Usually credit card companies will increase the interest rates, as well as charge a penalty if a student falls behind on his or her payments. This will leave the student with a bad credit history, and will be seen in the report for as long as seven years. This will affect the student’s ability to acquire future credit such as when he intends to buy a house or a car. Some students opt to enroll as part time students to cut up their work load and free up some time so they can work and pay for their balance. Some stop studying altogether and choose to work full-time to pay for their loans faster.

5. How can students manage finances so as not to fall heavily into debt?

Students should keep track of their money by mapping out a budget and listing all sources of income as well as every purchase and expense he makes. This way, the student will know exactly how much he has spent and how much he still has left.

6. How can you tell if a credit card company is giving you a good deal?

Before signing any contract or application, the terms, interest rates and hidden charges should be understood by the student. Cards that make students pay annual fees on top of the interest rates should be avoided. Students should also look for cards which offer interest-free grace periods provided that they are able to pay during a certain period of time.

7. What is the role of the parents when it comes to their children’s student credit?

Parents should encourage their children to spend money wisely and teach them to handle debt before they start college as much as possible. Some credit card companies offer to issue an extension card for the child of their client. There is even a new plan wherein students are given credit cards and parents can refill it with money, so the students will be able to make cash withdrawals of charges depending on the amount of money their card has. Parents should make their children realize that as much as possible, credit cards should only be used for emergencies – that divine faux fur coat slashed 70% off its price is not considered an emergency.

8. Is taking a cash advance a good idea?

Cash advances should be avoided. Not only will you pay interest from the time of withdrawal, cash advances will leave you with high paying interest rates with no grace period to speak of. There is often also a cash advance fee. Before you know it, you will be in a really big financial crisis should you start making cash advances a habit.

9. Is it worth it to use credit cards in paying for small amounts so that the points will accumulate and I will be entitled to nicer gifts towards the end of the month?

Sure, there are credit card companies that offer gifts depending on the number of points the client has accumulated, but paying using plastic for just about anything should be avoided because you will still have to pay interest rates. It is not worth it to get a nicer gift in the end but accumulate fees and pay interest for little things like a can of Diet Mountain Dew or a pizza. Using a credit card for everyday expenses is a bad habit to form.

10. What are penalty policies?

Should a client fall behind on his payment, credit card companies usually charge sky-high penalty rates and cancel their low-rate offers, so it is important to ask about this before signing up. It could also trigger universal default penalties which could increase interest rates on other cards!

Students should know how to manage finances and should be aware of the consequences should they miss payments of their credit cards before they go to college and apply for credit. It is the key to a financially stress-free life in the future.