Finance Tips

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.

A recent addition to a college student’s must-haves is a credit card. Along with the cell phone, the credit card is becoming more and more prevalent among young people ages 18-25.

Perhaps it is but natural for credit companies to mine this previously untapped market. More and more products and services are being targeted towards these customers. And the more cool stuff is out there, the more they will want to buy – if not with cash, then on credit.

Unfortunately, the problem with swiping away plastic is just that – students fail to realize that with each swipe they are one step closer to debt, which they may be unable to manage. That is why it is important that the right information on the judicious use of credit cards be made available to students.

That is not say that a credit card per se is a bad thing. In fact, when used wisely, it becomes a smart way for young adults to build their credit history, which they can continue to build on as they becoming self-supporting professionals.

Having a credit card also teaches students financial responsibility – showing them that it is important to live within means. It makes them aware of concepts such as principal, interest, balances and debt. The earlier they get comfortable with these, the better they can cope further on in the future.

On the other hand, young adults can still be prone to financial naiveté particularly when it comes to fine-print terms and conditions. Perhaps in the excitement of being issued their own credit card, they may simply skim over, if not totally forgo, reading the terms and conditions the credit company stipulates over the use of the credit card.

It is possible for someone of that age to be content in knowing that their card offers 0% APR. What they may not be aware of is that the offer is for a limited time only or that if monthly payments aren’t fully paid, a high finance charge will be applied.

Although nearly 80% of college students today own more than two credit cards, it is unfortunate that less than half are able to pay off the monthly balance. This only proves to show how little effort is made to educate students on the right usage of a credit card.

If you’re a student considering getting or already owning a credit card, or if you know someone who does, here are some things to help you get started on learning how to use a credit card wisely and to manage finances in general.

- Consider the nature of your income and how much of it is stable income.
Credit card statements come in monthly. Therefore, you should know how you would get the money to pay for these. Stable income is important because you will be relying on this to make those regular payments. If you don’t have a steady source of income, rethink getting a credit card. Continuing with one in spite the lack of a stable income will run you into debt in no time.

- Observe your credit limit.

Unless you specifically ask for it, a credit company will set the limit for you. To avoid unmanageable debt, your credit limit should be around 25% of your stable monthly income. So even if you’ve topped off your credit, you’ll still be able to pay off the monthly balance. If your credit limit is beyond 25%, call your credit company right away and ask for an adjustment.

- Designate purchases

Credit cards should not be your primary method of payment. It should only be a means to bridge gaps in your cash flow. As early as possible, develop the discipline to limit certain purchases for your card.

For example, it is a practice of some to charge important things such as rent and utilities to a credit card. The rationale for which is that even if the cash income is delayed, payments for the essentials will not. However, the idea is that the balance will be fully paid off by month’s end.

These tips should get you started as you build a good credit history. You may start out small now, but as you learn good financial management early on, in the future, handling bigger things will hopefully be easier.

Once a young person enters college, there’s a whole range of new responsibilities that have to be faced. One of the most important is the art of managing often limited finances. Student credit cards are specialty cards offered to initiate young people in the use of credit. No income? No credit record? No problem! The only qualifying factor is that they an enrolled student at a four-year university.

Anyone, including high school students, can apply for one of these credit cards, but they’re generally meant for college students. Although these cards may be easy to get, they typically charge heftier fees and interest rates, and smaller credit limits.

Young adults generally have no established credit history. Young people with limited experience and no established credit history are often frowned upon by credit card companies. However, those who are attending college with their focus on the future demonstrate a degree of maturity and responsibility that gives companies a bit of assurance that they will be able and willing to take care of their debts. Also, parents are often willing to come to the rescue to pay the bill, especially if they’ve co-signed for the credit card.

Two Types of Credit Cards

Secured Credit Cards – The student will be spending money that has been deposited in a bank account in advance. With this type of card there is no risk of accumulating long-term debt or interest. Cards are also available that allow parents to link a student’s card to their personal account, or let them keep refilling the teen’s or student’s accounts as they go along. It will cost an enrollment or annual fee and additional fees each time money is added to the card.

Unsecured Credit Cards – This is a traditional credit card that is an actual loan from the bank. No advance deposit of funds is required. Interest is applied to the balance carried from month to month and is often substantially higher than other credit cards. This type of card is much harder to get approval than a secured credit card.

Details of the Best Offers for Students

• The lowest APR card will help when a balance must be carried from one month to the next. An interest rate in the mid-teens is reasonable for students.
• A long grace period will allow for a longer period of time before you have to pay interest.


• Look for a ‘no annual fee’ offer.

• Employed students are more likely to be approved, as it shows responsible behavior.
• Be truthful on your application. It will increase the probability of getting the best rates, as the company will verify all the information on your application.
• Online account access is a plus to easily keep track of balances and payments.

Using Student Credit Cards Wisely

Begin with a budget that can be easily managed each month and stick with it. Even though new credit card consumers are typically offered a limit of $500 to $1,000, limit yourself to what you can repay each month. Safer than cash, use your credit card to purchase student necessities.

Student credit cards that include rewards are available through major issuers like Citibank and Chase who has partnered with retailers like Starbucks, Amazon, and the Gap. Be careful that the rewards don’t entice you to spend outside your budget just to earn the reward.

If you are a parent sending your child off to college, or a college student yourself then you will probably be thinking about securing finances. It is important that you protect yourself from making any huge mistakes, yet also learn the skills you will need in the future. This is why college students credit cards are a great idea for any student.

You may be worried that getting a student credit card as you might just rack up debt from day one. However, these type of cards are actually used as a great learning tool alongside a few emergency funds should they need them. Most student cards will have 0% interest for a set period of time, giving you the time and flexibility you will need while studying. This means you will have much less chance of getting lost in debt.

Having a credit card is a good learning tool to help you to spend responsibly. With a little budgeting, you can ensure that you make their payments regularly and start building that credit history that will be so important once you leave college. Unfortunately this kind of credit history is almost essential nowadays, so it is a great idea to start to build it up early in life.

There are a number of offers out there, so it’s important to research to find one that will benefit you the most. Some college students credit cards will come with free gifts and other great features, but you should not be swayed by the promotions and choose the one that ultimately offers the most long-term benefit.

Most people agree that learning to manage one’s personal finances at an early age is imperative. I certainly did not have much guidance in this area when I was studying and between seeing my friends and cramming for exams it did not rate as a high priority! Financial independence is something most human beings strive for yet very little is taught on this subject at schools and universities alike. It is a shame that such critical life skills are rarely addressed in our youth unless our parents are particularly diligent in this area, as many of us have to learn our lessons the hard way.

Whilst at university I observed many of my friends struggling with student credit card repayments. These guys had fallen into the easy trap of spending money they didn’t really have and leaving the worrying for a rainy day. Well guess what? When it rained it poured! One particular friend of mine was spending a lot more on his credit card than he was able to earn each week. I’m sure it was nice buying all those girls those drinks but was it worth the headache of insurmountable credit card interest repayments? This friend still pays to this day for his mistakes as his credit history will not qualify him for anymore credit of any kind. This is quite sad because credit actually can be beneficial to those who manage it appropriately. In fact it could be argued that every human being will need or at least benefit from some type of credit in his or her lifetime. You may know that it is very rare for investors to use their own money in business, instead they leverage the bank’s money to gain profit for themselves before paying the bank back. This an acquired skill and a whole other topic.

So, the question is; should students have their own student credit cards? Despite my rather bleak introduction to this article I would say absolutely yes. I say yes because as I said there are many benefits of having some credit. Also, learning how to manage credit from an early age will set you up to avoid some serious financial headaches in the future. Remember my friend? Trust me, you don’t want to end up like him.

Student credit cards are readily available these days. All major banks will actually have a range of credit cards specifically suited to the needs of the student. Often this might mean reduced rates, student focused benefits, etc. Applying is made very simple by websites like [http://www.uscreditcardguide.com] where you are able to review the best offers from different banks and also apply online for fast and easy approval. Just remember to have your personal financial information on hand so you can fill out the forms correctly.

There are a few reasons I believe it is important for students to have their own credit cards. Firstly I recommend every student have an ‘advisor’. An advisor can be a professional, a parent or family member, or friend with skills in this area. Most college campuses will offer free financial advice to its students as well. An advisor can help you with budgets, understanding interest rates and help you understand your unique situation. It is important to understand your earning capacity and know whether it will allow for credit card repayments.

It is very beneficial to anyone to establish a credit history which banks use to assess further loan and credit applications. If you wish to own your own home you will have to go through this one day and the longer you can show have adequately maintained a credit card and its payments the better chances you will have.

Financial emergencies, which all of us can relate to, will also come up and a credit card can really make things easier to manage these little crises. Often a low limit of $500 to $1000 is all you need to cover some unexpected expense. It is a great feeling knowing you can handle these situations without having to phone home or borrow from a friend.

Simply using credit cards to pay for things and then transferring money from your savings account to cover the costs on your credit card is a good way of earning benefits from your credit card supplier. These benefits will range from frequent flyer points to shopping credits. Check some really cool student cards including the extremely popular MTV Card.