Finance Tips

College students can start building that all-important credit history with student credit cards. Next to a checking and savings account that offers a good amount of flexibility and low fees, a student credit card is one of the most important tools a young person can have starting out in life.

The fact is that in many cases no credit is worse than bad credit because like so many individuals, lending institutions are wary of the unknown. Even if one is able to secure well-paying, steady employment right out of college, banks will not write car loans or home mortgages without some kind of credit history – and student credit cards are an excellent way to get started.

There are some issues to keep in mind when applying for student credit cards One is the issue of no prior credit history; in order to successfully apply for student credit cards for the first time, it’s often necessary to have a co-signer with a strong credit history. Credit card companies do this in order to protect themselves; should the cardholder default for any reason, the co-signer becomes the party responsible for repaying the balance. For this reason, it’s an excellent idea to compare the terms offered by several different companies.

The other thing to keep in mind is that the interest rates on student credit cards are likely to be high, while the amount of the credit line is unlikely to exceed $1000. This is for the cardholder’s protection as well as the credit card company’s. By establishing a reliable payment record however, it should be possible to get much more favorable terms in a reasonably short period of time (typically a year or two).

In the meantime, used prudently, student credit cards can be valuable tools; many even offer rewards and incentives. The Discover® Student Card is one such instrument; cardholders earn unlimited cash rewards, including up to 20% rebates for online purchases.

The Bank of America Student VISA Platinum Plus Credit Card is one that requires no cosigner. There is no annual fee, and one can access his/her account online. In addition, this student credit card offers protection against fraud and identity theft – a real danger when shopping online if one does not exercise proper caution.

You may find that student credit cards such as these offer “0% Introductory APR.” Keep in mind that these rates are introductory; after the first six months, they can go as high as 16.99%. However, many student credit cards offer an interest-free “grace period” for balances paid in full every month – another incentive for using these cards in a prudent manner.

Those who are eligible for student credit cards are at least 18 years of age and are enrolled in a two-year college or four-year college or university.

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.

College is the last care free step before real life begins, or at least it should be. Students should be able to go to sleep each night with the only pressing responsibility being the English exam tomorrow morning. They should still get to live in a world where although they can’t afford much more than the occasional late night drive through Taco Bell or downloading the latest hit single, at least they aren’t worrying yet about paying a mortgage, most forms of insurance, utility bills, or the college loan that is allowing them to get an education.

Unfortunately, for many college students this is not the case. Many are already burdened with financial pressure because they are accruing credit card debt, in some cases over $7,000 worth of it. Increasingly, students are even coming to campus with credit card debt in hand. Consolidated Credit Counseling Services Inc. reports that 20% of freshman got their credit card in high school and nearly 40% sign up for one in their first year at college. With the abundance of on-campus, mail and Internet card offers giving low introductory rates, freebies, and bonus airline miles, it’s not surprising to find that according to a 2001 Nellie Mae study 83% of all undergraduate students have at least one credit card and carry an average balance of $2,327.

The problem of high credit card debt has many implications for a student. Some end up dropping out of college all together so they can work full-time just to pay credit card bills. If they are able to stay in school, but have in the process ruined their credit rating, it can affect their ability to rent an apartment, afford insurance and even get the job that will help them to pay off their debt. Even relationships suffer as a result of financial stress. There is also a psychological affect on students. The stress can lead students into depression, and in a few cases has been a contributing factor to suicide.

Of course it hasn’t always been like this. According to Dr. Robert D. Manning, Professor at Rochester Institute of Technology and author of Credit Card Nation, in the late 1980s student credit card limits were around $300-$500 and parents were required to co-sign. But when credit card companies began making a lot of money during the 1991 economic recession, they started looking for new markets and found it in the student population. Issuers dropped the co-signing requirement and started raising limits, which, when combined with parents’ increasing financial pressures and higher costs of education, gave students a way to fund themselves through college.

And students are an easy market to tap into. In his article “Credit Cards on Campus,” Manning writes, “Credit card companies encourage fantasies of easy money because students are so profitable: teens have financial naiveté, high material expectations, and responsiveness to relatively low-cost marketing campaigns, high potential earnings, and future demand for financial services.”

Credit companies advertising to the vulnerabilities of young students is not the only factor that goes into the current trend. Most students simply have not received the education in personal finances and credit card management that they need to meet the onslaught of offers. According to Consolidated Credit Counseling Services, Inc only 15% of high school students take a personal finance class. And, according to the Jump$tart Coalition for Personal Financial Literacy, a non-profit organization which promotes financial literacy at the K-12 level, parents for a variety of reasons are not talking to their children about the privilege and responsibility that goes along with using a credit card.

Dr. Carol Carolan, Executive Director and Founder of the Center for Student Credit Card Education, says that the single best thing parents can do to help their children avoid the pitfalls of credit card debt is educate them. Parents need to talk to their children about it early on and regularly. Dr. Carolan suggests the following tips for parents.

When a child has reached an appropriate level of maturity and understanding of personal finances, co-signing a credit card can be very beneficial. Get a credit card with a low limit and no annual fees (visit the “Card Reports” section of our website to comparison shop for student credit cards). Discuss with your child the details of the credit card including interest rate on purchases and cash advances.
Review all the expenses every month. Show your child what finance charges might apply if the balance is not paid in full and on time. This includes any interest, fees, and penalties. Be a good role model.

Experts don’t all agree on the appropriate age for a first credit card. Dr. Manning, for instance, argues in his article Credit Cards on Campus that having them at an earlier age may actually result in fewer debt problems later on.” Other experts argue that waiting until the junior or senior year in college is best. The bottom line parents need to realize is that once students reach the college campus, they will be inundated with credit card offers and will be able to get a card regardless if they are supported financially solely by their parents.

And talking with students involves more than mere calculations of fees, interest rates, and balances. Students need to understand the messages they receive through advertising, the difference between a want and a need, as well as the lure of money. Give students a healthy, realistic perspective of money and material possessions and they will be better equipped to make wise decisions.

Universities and colleges play a huge role in the current trend of high student credit card debt. Some invite credit card issuers onto campus because they receive revenue as well. But others are starting to recognize the problem and are restricting the activities of credit card companies on campuses. Manning states in his book Credit Card Nation, that “During the academic year 1999-2000, over 400 colleges and universities formulated official policies against on-campus credit card marketing and nearly 600 other schools are considering similar restrictions.”

Some institutions like Rochester Institute of Technology (RIT) and the University of Central (UCA) Arkansas are even beginning to require classes in personal and consumer finances. Mary Ann Campbell, CFP, professor of personal finance at UCA and professional speaker with Money Magic, Inc., has a mission to educate students, educators, and adults about money. She is currently working on her dissertation about college students and credit card debt. Campbell is researching the best methods of reaching college students through a high impact presentation warning them of the perils and privileges of plastic. Like other experts, Campbell is not against students having credit cards. In fact, she says it is easier to get one as a student and can help them build the good credit history needed after graduation. But students do need to be educated. Campbell gives the following tips and reminders for students.

There is true magic to compound interest when it’s working for you (as in an investment or savings account), but true devastation when it’s working against you (as in credit card debt). Even when you buy something on sale, the interest alone can double the price. Account for everything. Keep records of each credit card including the interest rates, fees, balances, due dates and purchases. Campbell suggests a good way to do this is to setup a spreadsheet in Excel. This will also keep you organized so you don’t miss another payment. The only way to get out of debt is to stop charging and always pay more than the minimum. If more than one credit card has an outstanding balance, then begin paying off the one with the highest interest rate first, then go to the next highest interest card, and so on. If in trouble, talk about it with someone you trust and respect. This could be a parent, teacher, or friend. Hiding it doesn’t make it go away. Credit scores can make all the difference in the world for good or bad. It can take many years to recover from a bad credit score. Learning to use credit cards responsibly is a gift. Seek to gain knowledge and wisdom. Credit is a privilege and it is the student’s personal responsibility not to let it become a peril. Campbell says, “The magic comes from you.” While in college, students need to think outside the box, but live financially within the box.

Credit cards can be an invaluable tool for a student. While providing security and convenience, if used wisely a student will build the good credit rating that is needed to secure other consumer loans, jobs, and lower insurance rates after graduation. Dwayne Blew, a member of CreditBoards, a forum dedicated to credit issues, is one example of a student who didn’t buy things he didn’t need and paid his credit card balance in full each month during college. Now he is reaping the benefits of a good credit score. Dwayne says, “One of the reasons you’re going to college is to improve your lifestyle once you graduate. After putting so much effort into school, why let something small like a credit card end up ruining it all?”

Many excellent resources exist to help students both avoid and get out of the credit card debt trap.

Comparing credit cards is an important step in finding the best one to suit your needs. CardRatings.com makes this search simple and easy by allowing you to research the best rated student credit cards. Consider utilizing the services of a nonprofit credit counseling service. Be very careful when considering a credit counseling service, though, as many counseling services are scams, including nonprofit services. Consolidated Credit Counseling Services, Inc. has a free, downloadable Budgeting Guide for students. Dr. Carolan has written a booklet titled The ABCs of Credit Card Finance – Essential Facts for Students that can be ordered online and it will be mailed to individuals free of charge.Message boards or forums are a great source of information. You can post questions, concerns, or comments and a real person will respond with real life information. Campbell says they are a gift and can even become a support group. You can join the CardRatings.com Message Board for free. Even if your school doesn’t require a personal finance class, take one if it’s offered. http://www.debtsmart.com/, created by Scott Bilker, author of the best-selling books Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart, contains several tools to help consumers deal with credit card debt.

The financial decisions students make in college have a long lasting impact on their future. They are learning how to use and manage various financial tools vital for life in the “real world”. When used wisely, credit cards are one tool that can open the doors for a life unencumbered by financial burdens.

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.

students credit cards are very popular folks with little or no credit. Student cards are designed to allow teenagers and the younger generation to not only build their credit history but also develop a sense of fiscal responsibility.

Students are often looked at as risky prospect by credit issuer. In fact, research has shown that a whole lot of young folks miss their payments or go over their card limits. You can’t possibly build a good credit history with that attitude. That’s why companies such as Chase and Discover focus on training students to become responsible individuals.

The selection of student credit cards on the market are not as wide as consumer or business credit cards. But you should do your due diligence to get the card that allows you to build credit history and get rewards back for being responsible. Here are the factors you should consider before applying for a student card:

Reputation: you should take into account the card issuer’s reputation before applying for a card. If you have paid attention to credit blogs and forums, you probably have seen a lot of complaints made by card holders about how they have been treated by their issuers. For example, If you end up with a credit card that doesn’t do you justice with their reporting, you can’t build your history the proper way.

Rates: your card APR determines how much you can save with your credit line. It’s true that student offers are less lucrative than consumer and business offers, but that doesn’t mean you should settle for a subpar offer.

Fees: you should always read the terms and conditions to find out about your card’s fees. A lot of student cards charge an annual fee but you should try to avoid paying annual fees at all cost.
Applying for a student credit card is a process that should not be taken lightly. It’s true that you can always apply for other cards in the future, but you should try to build your credit history properly in order to make sure you qualify for the more lucrative offers in the future. Student offers are the first step towards building a long-lasting good credit history, and that’s how you should look at student cards: great credit building tools.