Student Credit Cards Should I Get One ?
By Jim Pow
Getting a student card for your son or daughter has many more advantages than disadvantages; it’s a first steep to building while in college. Getting a student card enables students to slowly build their credit, assuming they pay their bills on time every month. Good history will help them when they need good to apply for car loans and to pass checks when they rent apartments or residences after college. A basic building tactic involves getting a student card and staying within the limit to purchase clothing, school supplies, food and other essentials while at school – and making prompt payments when the bills come due. Make sure you son or daughter is responsible enough to use it wisely. If not, you might want to hold of on getting them one as their history will be with them for the rest of their life. They need to learn about the importance of being smart with money; this is one of the most important life-lessons that parents can pass on to their children.
When choosing the right college student card, look for the company offering a longer grace period so that you more time to make payments for your expenses, before accruing any interest on the balance. card companies are anxious to acquire student customers, since they know that a good borrowing experience early on can earn them customers in the future. So there is no shortage of offers for both secure and unsecured cards in the mail. If you are a college student, whether in your first year or getting ready to graduate, one thing you need to start thinking about is your finances. One of the best ways to start building up good is to go ahead and get a student card. There are two types of student cards that you can get. An unsecured student card does not require that you pay any money up front. With an unsecured student card, you can usually request a limit increase after 6 to 12 months of timely payments of at least the minimum due or more. There are a variety of great benefits to having a student card.
Student cards have notoriously high interest rate and finance charges can accumulate easily. Interest is charged at a percentage of the overdue balance. Interest rates have been up lately and the lower interest rate cards have been few and far between, even to those with high scores. Your child will learn about interest, particularly if he or she is paying the bills. In fact, the only real difference between a student card and a regular card is that student cards have higher interest rates. Over time the interest keeps adding up and eventually if the student is only paying the minimum amount due they are in reality only paying off the interest and their card balance is never going to be paid off. Explain to your student that if they fall behind in payments, the card issuer will increase their interest rate. When cards were first introduced, they were a pretty simple proposition: use your card for purchases, and be charged a single rate of interest on your unpaid balance. Then came the rise of the ATM (cash machine), and card issuers realized they could lend money by allowing their cards to be used to withdraw cash on account, and could earn more this way by hiding away a higher interest rate for cash withdrawals in the agreement small print. Not to forget the different interest rate often charged for overseas use.
Students not only have tuition costs, but the cost of books, meals, gas, cell. A card for college students also provides you with the opportunity to learn how to budget your money and handle your finances as well. For students who are trying to get started
early on achieving good credit, a student card is a great option. Many students can be tempted by what is apparently "free money", without thinking of the consequences. Likewise, late payment fees can be an eye opening experience for many young students. It's therefore essential that students always pay at least their minimum payment due on time and avoid late payments to build and keep a good rating. Track Spending: Students can effectively track their spending by reviewing and storing the monthly card statements that will be sent by the card company. This will help students understand the importance of budgeting and record keeping.
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Jim Power is writer for the student loan information site www.studentaides.com where there is more information to be found on student cards. please visit www.studentaides.com for more information.
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