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[B159]Bank Student Credit Cards

by Tom Tessin, Tom

I'm sure you've been stressed out by now reading all over the internet on how to teach your student to use a credit card. The fact is that you're having a hard time because you started too late and your teen is now technically an adult. If you could go back in time, you would be the one that would tell the new parent to teach their child about money and credit cards earlier.

If your child is arguing about a credit card and you're steering them away from it, you're going to have a hard time. In fact, 80% of today's college students carry a credit card. This number generally goes up year after year. What makes a student get a credit card? It's about being an adult and having that ?back-up? plan if all else fails.

If your child still listens to you about money and everything else under the sun, it's important that you start talking to them about the wonders of a credit card. While a credit card isn't necessarily bad for a kid, it can be if he/she doesn't know how to use it. This is where you, the parent will step in and teach them the correct responsibility.

?Well, I'm bad with credit cards and I feel that if I teach my child my habits, they will turn out just as bad? If you're asking yourself this question or you're using it as an excuse not to teach your child, then you should really seek financial advice or sit down and do a lot of reading and research because after all, learning about credit cards and financially responsibility isn't that bad at all!

When your child receives their first credit card in the mail, it's important that you teach them all about fraud issues and how a credit card should be properly stored. Make sure that they have their name signed on the back and they also have the credit card's toll free number handy just in case the card gets stolen. Remember to tell them that they should never lend out their card or give the number to anyone suspicious.

Most students make the mistake of treating credit cards like a piece of plastic. They will buy, buy, and buy and not realize how much debt they are actually raking up. If you can influence your child to get a particular credit card, you should recommend to them to get a debit card. This way they can actually see how much money they are spending month to month.

In the end, a credit card isn't evil for a student. Credit card policies are a lot stricter today than they were fifteen years ago. They generally give out low credit limits and offer nice incentives for students to pay their bills off in time. Just remember even if your child doesn't listen, it doesn't hurt to tell them some advice, it may stick in their head down the long road and they will thank you in the end.

Perhaps it is but natural for credit companies to mine this previously untapped market. More and more products and services are being targeted towards these customers. And the more cool stuff is out there, the more they will want to buy – if not with cash, then on credit.

Unfortunately, the problem with swiping away plastic is just that – students fail to realize that with each swipe they are one step closer to debt, which they may be unable to manage. That is why it is important that the right information on the judicious use of credit cards be made available to students.

That is not say that a credit card per se is a bad thing. In fact, when used wisely, it becomes a smart way for young adults to build their credit history, which they can continue to build on as they becoming self-supporting professionals.

Having a credit card also teaches students financial responsibility – showing them that it is important to live within means. It makes them aware of concepts such as principal, interest, balances and debt. The earlier they get comfortable with these, the better they can cope further on in the future.

On the other hand, young adults can still be prone to financial naiveté particularly when it comes to fine-print terms and conditions. Perhaps in the excitement of being issued their own credit card, they may simply skim over, if not totally forgo, reading the terms and conditions the credit company stipulates over the use of the credit card.

It is possible for someone of that age to be content in knowing that their card offers 0% APR. What they may not be aware of is that the offer is for a limited time only or that if monthly payments aren't fully paid, a high finance charge will be applied.

Although nearly 80% of college students today own more than two credit cards, it is unfortunate that less than half are able to pay off the monthly balance. This only proves to show how little effort is made to educate students on the right usage of a credit card.

If you're a student considering getting or already owning a credit card, or if you know someone who does, here are some things to help you get started on learning how to use a credit card wisely and to manage finances in general.

- Consider the nature of your income and how much of it is stable income.

Credit card statements come in monthly. Therefore, you should know how you would get the money to pay for these. Stable income is important because you will be relying on this to make those regular payments. If you don't have a steady source of income, rethink getting a credit card. Continuing with one in spite the lack of a stable income will run you into debt in no time.

- Observe your credit limit.

Unless you specifically ask for it, a credit company will set the limit for you. To avoid unmanageable debt, your credit limit should be around 25% of your stable monthly income. So even if you've topped off your credit, you'll still be able to pay off the monthly balance. If your credit limit is beyond 25%, call your credit company right away and ask for an adjustment.

- Designate purchases

Credit cards should not be your primary method of payment. It should only be a means to bridge gaps in your cash flow. As early as possible, develop the discipline to limit certain purchases for your card.

For example, it is a practice of some to charge important things such as rent and utilities to a credit card. The rationale for which is that even if the cash income is delayed, payments for the essentials will not. However, the idea is that the balance will be fully paid off by month's end.

These tips should get you started as you build a good credit history. You may start out small now, but as you learn good financial management early on, in the future, handling bigger things will hopefully be easier.

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Both Tom Tessin & Morgan Hamilton 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.

Tom Tessin has sinced written about articles on various topics from Mileage and Fuel, Education and Finances. Tom Tessin runs FINDcollegecards that focuses on . Tom Tessin's top article generates over 673000 views. to your Favourites.

Morgan Hamilton has sinced written about articles on various topics from Credit Cards, Women and Guided Meditation. . Morgan Hamilton's top article generates over 201000 views. to your Favourites.