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Are you a first time credit card owner? If so, this article is written for you. Find out the drawbacks of owning a student credit card that you should take into account?
Credit education is now being implemented in some colleges in the hope that students would become more prepared on managing their finances. In the past years, reports have shown that many students faced credit card debt and some even had to file for bankruptcy because of insurmountable debts.
According to the latest survey by Nellie Mae- a subsidiary of Sallie Mae, the nation's leading student loan company, graduating students each carry an average balance of $8,612 on their credit cards while undergraduates carry about half of that amount.
Financial experts think that credit card companies are also to blame. Why? Credit card issuers realize how big the student market is and it is for this very reason that they introduced credit cards for these young people. The advertisements for student credit cards are clearly meant to entice these youngsters to sign-up for a card. Freshmen students are particularly the favorite target of credit card issuers.
The question is, are these students really ready to handle their own credit? Are they up for the challenges of being a credit card holder? Do these young people really understand the responsibilities and consequences of establishing credit?
According to a survey conducted in April 2008 by The Hartford Financial Services Group, 55% of parents with children ages from 15-24 question the possibility of financial independence. A related study on senior high school students conducted by The Jump$tart Coalition for Financial Literary revealed that on questions regarding fundamental personal finance skills, only 48.3% were answered correctly.
Today, as classes on personal finance management are being introduced in colleges and universities, parents and teachers are hoping for a more positive result. For example, starting January of this year (2008), the National Endowment for Financial Education (NEFE) has also launched the new online financial management course called CashCourse to 126 universities. This online course is designed to help students make wise financial decisions even after they graduated.
Professors also realize that changes need to be made. For instance, in a regular match class, students are taught more than just numbers. They are also taught about the fundamentals on credit cards and loans. Basic terms such as interest rates, APR, transaction fees, repayment terms, closing costs, late penalty, pre-payment penalty, credit report, FICO score etc. – are all discussed to give students a better understanding on how different types of credit work. The differences between good debt and bad debt are also part of the classes.
Learning the basics about credit cards can make a big difference in how students use them. The problem is, because these subjects are not mandatory, only a few students are taking these classes. Not many young people are interested to learn about finances. In fact, teachers observe that those who do not take them are the ones who seem to need those classes the most. Nevertheless, offering personal finance management classes is a first step in reducing cases of debt among students.
As parents, it would be great to encourage
your children to attend these courses.
On the other hand, if you are a student, open your mind and develop your
money-management skills before you even decide to apply for any type credit.
Credit cards today have become an integral part of our lives. They have become a necessity for college and school students also. A student credit card facilitates everything that a normal credit card does. The only difference is that a student credit card is designed to meet the needs of school and college students, with some restrictions.
Some companies make it mandatory for a guardian or parents to sign so that they are accountable for fulfilling the debts the student is not able to pay off. A student credit card usually has higher rate of interest, which reduces the financial risk for the credit card issuing company. Lastly, since hardly any student has established any credit ratings, the spending limit is substantially lower than the normal credit card. The usual limit is between $500 and $1000.
However, the student credit card also offers many advantages. A student can take the first steps towards financial independence through these credit cards. You can establish a good credit rating. This credit rating is very helpful if you plan to borrow money for financing a car, a house or a world cruise. If the credits are paid off regularly and in time, you will gradually gain a good credit rating and this will improve your chances of getting the entire loan improved.
A student learns managing money in a responsible manner through the student credit cards. It is necessary for a student to be adept at managing the use of credit card, which in turn teaches how to manage money in future. You will have to stick to a budget. This will gradually develop into a habit. So the earlier you start to learn how to manage your money and your debts, the better you will be off.
The student credit card with all its advantages has some pitfalls to be careful of. This can be easily avoided if the student is made aware of such situations. It is best for the student to carve out a budget and stick to it so as to keep overspending in check. It is good to have a practical idea of the spending and income. It is good and necessary for the student to stick to the budget.
It is good to not opt for a student credit card if you cannot afford it. However, a student credit card has marvelous power. It gives you the power to buy at the same moment a concert ticket, a dinner or the latest fashion attire. It is easy to ignore the need to think about it but it should be planned well in advance.
As said earlier, a student can become financially independent but only if the student credit card is used judiciously and wisely.
Do you already have a student credit cards? Find out how to be more cautious in using your student credit cards to avoid being stolen.
It is true that a student credit card is a lot easier and more convenient to use than check or cash. Having a student credit card makes it possible for students to make purchases online, make online ticket reservations, earn rewards, and build their personal credit history at the earliest possible time.
However, along with the advantages of using student credit cards, there are also some risks involved. In this article, we’ll discuss one of the most common dangers that threaten student credit card holders- the threat of fraud due to stolen credit cards.
Losing Your Student Credit Card
Everyone must be concerned about how they handle their student credit cards. Students seem to be more prone to lost or stolen credit cards because they’re the ones who are often more relaxed or complacent in handling their cards.
If you’re a student who lives in the boarding school or apartment, you could be sharing your room with other students. Leaving your things in your school locker also increases the risk of your credit card being stolen. Carrying your student credit card in your wallet also leaves you more prone to loss or theft.
What would you do in case your credit card gets lost or stolen? How should you deal with that kind of situation? Are you aware of the steps you should take to protect your account? Below are some tips on how to handle a lost student credit card:
Call your credit card issuer right away. If you discovered that your student credit card is missing, the best thing to do is call your student credit card company immediately. Alert them about the lost of your card. Request that your account be blocked immediately to prevent the thief from using your card.
Know your student credit card’s terms. Are you aware about your credit card’s policy on lost cards? Some credit card companies impose a $50 liability protection for unauthorized charges. Thus, in case of unauthorized charges in your account, you would only be paying $50 regardless of the amount of the unauthorized charges. There are also student credit cards that provide a $0 liability protection which means you won’t have to pay anything at all for unauthorized charges.
Alerting your company about the lost of your card at the exact moment eliminates possible problems. But what if you never lost your student card yet someone has been using your account without your permission? You credit card company may send you a notice regarding unpaid charges in your account which you’re not even aware of. In this case, you have the right to dispute the charges.
Call your student credit card company and inform them about your concerns. Follow up your complaint with a letter of dispute, sent via registered mail. Your letter should clearly explain why you think the charges are incorrect or fraudulent. Upon receipt of your letter, your student credit card company would conduct an investigation on the matter. You should also request for a card replacement if you suspect the possibility of identity theft.
Are you planning to apply for a student credit cards? If this is your first time, this article will surely help you out.
Are you a student about to enter college? If yes, have you thought about getting your own student credit card? Perhaps you may think that having a student credit card is not in your list of priorities. Some people may even have a negative impression about credit cards for students, thinking that owning a credit card will only put the student at risk of debt.
It is true that having a credit card involves responsibility. However, when used correctly a student credit card actually has its advantages. Here, we’ve listed the major advantages of owning a student credit card that you should consider:
Get approved for a good credit card deal with no hassle. Generally, the best credit card deals in the market require good to excellent credit. An applicant must also have a stable job or a reliable source of income in order to get approved.
This is not the case for student credit cards. In fact, this would be the only time you can apply for a credit card without worrying about these requirements. Once you’ve graduated, you will not be qualified to apply for a student credit card any longer.
Build your personal credit history early. Having a student credit card is a tool for building your credit history. Why is it an advantage to have an early credit history?
Lenders and insurers have more confidence in clients who have a clean record of credit history. Thus, the older your credit history is the better candidate you would be in the eyes of lenders. It is no secret that the best rates and terms are given to customers with the best credit rating.
Take advantage of the opportunity to purchase online. Purchasing from online merchants is not only more convenient, it is also cheaper. Online shops often sell goods at a lower price compared to regular shops because of lower capital. Enjoy great savings and discounts when you use your student credit card to shop online.
Use a Student Credit Card to Your Advantage
As we’ve said in the beginning of this article, being a credit card holder involves responsibility. It doesn’t matter whether you own a regular credit card or a student credit card - all cardholders must be aware about their obligations to avoid the risk of debt.
To sum it up, there are four rules that a student must remember when using a credit card:
1.
Use your student card only for important purchases. Don’t use your
student credit card for things that you can pay in cash. Never use your
card for an unplanned purchase.
2. Pay your bills on time. Building a solid credit history largely depends on how timely you are with your payments. Be conscious about your payment due dates and always submit your payments on time.
3. Monitor your account regularly. You can do this by examining your monthly bills and accessing your online account (if your credit card company provides online access). Make sure that there are no unauthorized charges in your account and if there are, inform your student credit card issuer right away.
4. Pay off your monthly bills in full. To avoid debt build up, it’s best to settle all your student credit card bills each month. Doing so will prevent you from maximizing your credit limit and frees you from additional costs like the APR and late penalty charges.
Some people have the negative notion that owning student credit cards lead to bad credit. This is because many students have been prone to credit card debt and some have even resulted to bankruptcy. But owning student credit cards doesn’t have to be a bane if you can avoid these student credit card mistakes listed here:
Signing up for the first college credit card you see. There are many college credit cards to choose from but most often than not, a student simply signs up for the first offer he or she receives. You may have received an attractive credit card from your mail or email. But when applying for your first credit card, you should do all the necessary research about the details and terms of your chosen card. If not, it is possible for you to get stuck with a student credit card that imposes unreasonable rates and charges.
Using up your credit limit in full. This is another common mistake that students make. Every credit card holder is given his own credit limit which he can use when using his credit card. However, this doesn’t mean you should maximize the entire allowable credit limit you are given. You should be aware that maximizing your credit limit leads to penalty charges and increased in rates in your account.
Not paying your bills on time. A student credit card debt is meant to be paid off on or before its due date. Untimely submission of payments is the number one cause why many students fall prey to bad debt. As a student credit card holder, you should always be aware of your payments and religiously keep up with them. In addition to this, untimely payment creates a negative impact on your credit report. Therefore, in order to maintain an excellent credit standing, you should never allow delays or misses in your credit card payment.
Using your student credit card on all your expenses. Credit cards for students are supposed to help you with your school expenses especially during inconvenient times. But this doesn’t mean you should get in the habit of using your student credit card for paying restaurant bills each time you eat out or when partying with friends. When you own a credit card, you should be more aware and responsible in how and where you spend your money. Bear in mind that everything you spent using your credit card is a debt that must be paid on time.
Not taking care of your student credit card. Another mistake that students often commit is being too careless in handling their cards. Leaving your credit card where other people can easily access it or copy the details such as your student credit card number puts you at great risk of fraud. Many students have obtained unauthorized charges in their credit without their knowledge because they have failed to be more cautious with the use of their student credit cards. If you own a college credit card, you must be more vigilant in handling it.
By Tom TessinIf you're new to the credit card game, you probably don't have idea on how the credit card market works. Before most people apply for their first card, they don't even think of what kind of cards they can apply for. Most appliers make the mistake of applying for the first credit card they see which is a big mistake because most of the time these cards are designed for people with established credit.
When people start their hunt for a credit card, they never think of the options. If you're going to school, you can be a huge candidate for a college based credit card. A student credit card is made for a student going to college and if you have no credit or you have credit, the chances of getting approved are great. Now, if you're not going to college, you'll want to look elsewhere such as a first time credit card or possibly a secured type credit card.
Now, the question everyone wants to know is how exactly do you get approved for a student credit card? As I mentioned above, if you don't have any credit at all, you're going to be the best candidate. This is exactly what the companies are looking for. They want someone that has no credit at all so they can swoop in and grab them as a customer. They are hoping that throughout your life, you will choose the credit card company that first approved you.
The reason why student credit cards are so easy to get is because companies generally give you a very low limit of about three to five hundred dollars. They figure that if you don't pay off your bills, you will have your parents to rely on since most college students keep in touch with their parents. The process of applying is nothing different than a regular card if you've looked at those applications before. The application requires some personal information such as your address, name, social security number, and a few other questions.
