Student credit cards are looked at by most students as an easy way to spend more money. But using every student credit card that is thrown at you does not make much financial sense. Used properly a student credit card can prepare you for the future and enhance your money management and planning skills.
The Benefits Of Smart Use Of Student Credit Cards
Through proper use of your student credit card, you build good credit history. This is something that will stand by you in the future. A good credit report helps you in future employment, your first car purchase, home purchase, as well as insurance. An intangible benefit of student credit cards is that it helps organize your finances. By being able to see a report of your spending you might realize that your nightly pizza for the year could have bought you your first car. But hey a student credit card is not about giving up pizza! It is about learning more about where your cash is flowing, which is a very good financial preparation for the future.
Each Card Is Different
When you apply for a college student credit card, be aware that the first one you see is not the same as the rest. Student credit cards differ in many respects. Remember like many other things in life when you get your first student credit card, do not forget about the fine print involved.
Building Good Credit History
Remember that while building a good credit history, you must have an active account. At the same time making your payments on time is important to your credit history. Never go on shopping binges that are going to weigh down your credit card. Instead keep a good account of how and where your money is going.
One way to keep the student credit card account active is to use it to pay your monthly bills. These could be telephone bills, utility bills or any other. Set a monthly expenditure target for yourself and use your college student credit card to monitor that target. You can then reward yourself by making that essential purchase that you always wanted to.
Make Informed Decisions
Most important is that you make an informed decision about the college student credit card you apply for. Each card has a different APR, annual charge and miscellaneous charges. But each card will also provide unique benefits. The APR is the rate at which interest is charged on overdue money. Your aim as a cardholder should be to always minimize finance charges as best as possible. However, in the event that interest is charged, you should have a card that charges you the least. Some student credit cards have a 0% APR initially and no annual fees.
Generally rewards programs are toned down on college student credit cards. However some cards do offer exciting rewards, rebates and insurance plans that make student life a lot easier. But regardless of potential reward benefits, be sure to choose a student credit card that is tailored to your specific needs, whatever they might be
Gaining Financial Wisdom
Beginning financial planning early reaps rewards later in life. However it must be done with care. It is easy to get carried away by the pace of student life and overspend. Use your college student credit cards conservatively and use it primarily to pay off monthly bills and expenses that you know you can pay off, but you can also build a good credit history that will pay back later in life. If you should choose to get a student credit card, think of it as an enjoyable learning experience outside the classroom. If you can do this, you will derive the maximum benefit from student credit cards.
The biggest potential downfall is, of course, the danger of falling into debt problems. If you graduate with a sky-high balance that you are unable to pay back, you'll be in danger of receiving a low credit score. And having bad credit is worse than having no credit at all.
That said, having a student card can be extremely beneficial. When used properly, it can serve as a tool to help build up your credit before you even finish school. Here's a look at student cards and how they work.
Different from the Rest
Student credit cards are designed for individuals that are just starting out in the credit world. Most of them come with a lower limit than other cards. Some of them require a parent or other adult to co-sign. Many let you sign up even if you do not have a regular income.
Student cards also often come with benefits that are geared toward the college lifestyle. They might include a rewards program based on your GPA or let you earn points when you purchase gas. Others will offer incentives such as going to an MTV event or airline tickets.
How to Use Them
Student credit cards can be a great item to have in your wallet when used properly. The first step toward wise management is to figure out what the card will be used for. You may decide to buy books and school supplies with it. Or you might want to hold on to it for emergency purposes. Once you establish guidelines on how you'll use it, try to stick to them.
When you do use the card, remember that you are actually taking out a loan. Whatever money you spend with the card will have to be paid back. So before you swipe the card, it's important to make sure you know how you'll repay the credit company. When you receive a statement at the end of the month, try to pay at least the minimum amount due. Whenever possible, pay off the entire balance right away.
What to Watch For
Many news headlines tell woes of college students that run up credit card debt. To avoid this scenario, read the fine print carefully before signing up. If you're worried about falling into debt problems, look for a card that comes with a low credit limit. If you end up with a high balance on one card, do not apply for another one until you pay off the entire amount due on the first one.
Use your student credit card wisely and you'll be rewarded in many ways. You'll have access to credit in case of an emergency, and a helpful financial tool for purchasing books and other school-related gear. When you graduate, you'll already have an established credit history. And you'll be on your way to a bright future in the credit department.
Both Robert Alan & Stephanie Andrews are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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