Are Great But . . . Handle With Care

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Student credit cards . . . . those three little words are enough to send shivers down the spine of any self respecting parent. Many mature adults have a hard enough time controlling themselves with their credit cards, never mind being expected to not only set a good example but also co-sign for their offspring’s spending spree. The more Junior runs up the credit card, the more they’ll have to run up theirs to combat the problem, kind of an ever increasing circle of debt if you’re not very careful. Having said that, credit cards for students can be a good thing when they are handled with care.

You may wonder why it’s down to the parents at all (well, parents of younger children who haven’t come across the situation yet). It’s all down to the Federal Laws which impose restrictions on the issue of credit cards to anybody who is under the age of 21 years unless the applicant has the ability to repay their own debt (which, of course, the majority of students do not) or has an adult who will agree to co-sign and therefore accept joint responsibility for the student credit card account. That’s where Mom and Dad come in! Let’s hope you’ve done a good job on teaching them how to be sensible with their allowance and save for a rainy day, cos if you haven’t there could be a tsunami heading in your direction.

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Okay, enough of the scare tactics . . . I know that you’re the sensible type who has taught your youngsters well, and credit cards for students really do have their advantages . . . and the credit card companies aren’t stupid you know . . . it’s in their interests to monitor the situation of student credit cards just as much as it is yours. There are real advantages for students to have a credit card, which we will look at in a minute, but just remember, our future depends on these students . . . they are the ones who are gonna’ run the country, make the important decisions which will affect the next generations of Americans and decide when and where to put you in a nursing home!

 Credit Is King

Credit is king . . . love it or hate it we can’t get very far in this world without it. Credit goes a long way to defining you in society today. If you want to take out a loan for making a big purchase your credit rating will be pulled to see just how good you really are at paying stuff back. Without a decent credit score you can forget it . . . your future and your life depend upon the state of your credit score. Student credit cards can set them off early along this right track helping them to build a credit presence, but remember, I said that a GOOD credit score is essential, which means that on the flip side, a BAD credit score can really muck up your plans!

The Golden Rules of Credit Cards for Students

Learning how to manage your finances is not something which automatically comes with age . . . it comes with practice. You might think that it’s a risky business letting a student loose with a credit card, but let me tell you, a “mature” 40 year old can do lots more damage if they haven’t had the required amount of credit card practice. There are some golden rules which apply not only to student credit card applicants, but to credit card applicants of all ages!

• Don’t go crazy. You might look at your “flexible friend” and see dollar signs flashing before your eyes, maybe those new boots aren’t out of reach after all . . . but try to keep your student credit card for student emergencies. Emergencies crop up when you least expect them, which is why they are called emergencies . . . . so make sure that you have an emergency fund available in your student credit card.
• Always try to clear the outstanding balance IN FULL at the end of every month. If you can manage to do this you won’t have to pay any interest at all, so in effect it’s free money. If you don’t pay off the outstanding balance in full then the interest really can start to add up, even on low start student credit cards.
• Never withdraw cash on your student credit card. I know, it’s tempting, especially when it gets to p**sed o’clock and you need some cash for a taxi home . . . do not be tempted. Leave your student credit card at home if you know that you can’t trust yourself. If you draw cash from your student credit card at an ATM it’ll cost you dearly. You will actually be paying interest from the day you withdraw the cash, so even if you pay off the student credit card in full at the end of the month you’ll still have had to stump up an amount of interest.

Just remember this:

• if you manage to pay off the balance of your student credit card in month you will be well on your way to a glorious credit score for the future, as well as learning how to keep in control of your spending.

If, however:

• you don’t manage your student credit card well, missing payments, making late payments etc then this will have a very real adverse affect on your credit score and you can find yourself being penalised in the future.

Choosing a Credit Card for Students

There are several options to available to students when they start looking for a credit card, so it’s alway worth doing a little homework (as if students don’t get enough homework already) to find the best student credit card for your needs.

• Search through all student credit card offers you can find.
• Compare the offers which are available. Look carefully at details like annual fees, will you need a co-signer, do they offer 0% for an introductory period (many credit card users learn to juggle these deals, moving from one 0% offer to another and never have to pay any interest . . . this is something you can definitely strive to achieve once you’ve got our first foot on the ladder). Do they offer cash-back bonuses? What about any specific tools they have to help you learn to use your student credit card responsibly? What will happen if your credit card is either lost or stolen? Will your family be able to load your credit card for you? What will be the fees involved? You see, there are loads of questions you need to answer before making your final decision and . . .
• Apply for your student credit card. Very often you’ll be able to apply for a student credit card online which is quick and easy . . . that’s how we all like our lives to be these days isn’t it?