These days a credit card is almost essential for anybody, let alone students, and as such is used for many purposes including making travel arrangements etc. There is a wide selection available, and some students end up with multiple credit cards, and these are the people that are most likely to get into debt problems. The one saving grace is that credit cards for students usually have a fairly low limit, so if they do get into debt, it won’t be too extreme.
A recent study has shown that about 80% of college students own credit cards with a typical balance being around $3500. A worrying thought to ponder is that when many students use their credit cards to buy stuff, they don’t see it as spending real money.
Another worrying trend that has been reported is that a number of students are using their credit cards to top up the money that they have borrowed using student loans.
Do no take the amount you spend on your student credit card lightly. Because if you overspend or miss payments, you will end up paying extra interest, and possibly damage your credit score. This might not seem too important to you now, but trust me, it will be a pain later on in life, as it will cause problems when you come to get a mortgage or auto-loan etc. Don’t ask me how I know.
So, I will sum up by saying that a student credit card can be a very handy tool to have in your locker as you work your way through further education. Just use it responsibly and be aware of the dangers. Also, do some research, there are some good deals out there.
I was not a privileged student as far as finances went. I was constantly searching for ways to acquire funds just to cover my tuition and book expenses. Other kids got to blow their parents money on liquor or ultra trendy/preppy frat apparel (pastel colored polo shirts and chino khakis galore, don't forget your $80 sandals), while I scratched and clawed to just get to class. At one time I attempted to sustain myself by playing poker, but that proved to be a futile idea.
It got to the point that I had been kicked out of the university multiple times in both semesters of my first year. Ironically, each time I was only coming up about $300 short of payment, though that was enough for me to have to scramble for some new plan to save my credit hours. Of course, once I made payment and was re-admitted into school, I'd be hit with a $200 late registration fee, and the cycle would begin all over again.
While I was suffering, there was an easy solution directly in front of my face each time I passed my bank. A student credit card typically has a spending limit of about $500 - $1,000. It's deliberately set low so students learn to spend sparingly, and banks are protected against witless college kids spending half of their cash reserve and then failing to make payment. However, my periodic bills of $200 and $300 would fit snugly under that limit, and even leave enough on top for me to have enjoyed a few small luxuries.
I walked past all the signs for student credit cards without even looking because I was raised with the stigma that many college kids have, that of the parentally-installed thinking that credit cards are bad news if you're young. Potentially because so many parents have found themselves on the wrong side of the credit and interest equation, thereby believing their offspring will fall into the same trap.
I wish I hadn't thought that. I could have been spared so much trouble - and so many late fees - if I'd just applied for a card.
Some student credit cards also require a co-signer. Banks do this as a safety net for themselves and the student, in the event the student can not make payment, and you can't blame them for wanting to cover the symbolic rear-ends of all parties involved.
Students facing my former plight may fear the high interest rates student credit cards have compared to other cards. That's entirely understandable, and credit cards shouldn't be taken lightly. However if you're responsible enough to handle the payments, you can build good credit early, which will give you endless advantages later in life.
Both James Hunaban & Derek Lenehan 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.