Students And Credit |
|
Student Credit Cards 101If you’re a college student, you probably already have a credit card. If not, you may have plans to get one or more soon. So why should you read on?
For those new to credit cards and for others who know all about credit, let’s go back to the basics. Why do credit card companies court college students? It’s obvious by the friendly representatives who offer a free t-shirt or CD just for signing up in the student center. Or the applications slipped into bookstore bags. Or mail boxes crowded with card offers. Credit card companies want college students to carry their card. Did you ever stop to wonder why? One reason is loyalty—once a person has a card in their wallet, they are likely to keep that particular card and its upgrades for years to come. Another reason: college students are good customers. While this may seem ironic considering that most college students are without a steady source of income, Robert Manning, Ph.D., Professor in the College of Business at Rochester Institute of Technology and author of Credit Card Nation, says this is one example of how the credit card industry has changed radically in the past decade or so. “Previously, conservative rules deemed a good customer as one that paid their bills on time,” he says. “Now, a good customer is one that can’t repay their debt.” “Credit is no longer an earned privilege,” continues Dr. Manning. “It’s now considered a social entitlement, and the screening criteria (for card applicants) is weak.” Banks make money by charging annual fees, late payment penalties and interest fees on unpaid credit card balances. Therefore, card holders with revolving debt (those who do not pay their balances in full each month) are desirable. NellieMae.org illustrates this point beautifully through an example of a student with a credit card balance of $7,000 at an interest rate of 18.9%. If this student faithfully makes the minimum monthly payment of 3% or $25 – whichever is higher, and does not charge anything else to the account, it will take more than 16 years and $7,173 in interest fees to repay the bill! Additionally, Manning notes the banking industry has learned that college students will draw upon various sources of income to pay their debt—including student loans, money from part-time jobs, and as a last resort, many will ask a family member to supply the funds to get them out of debt. How to make credit work for you, not against you According to Nellie Mae, 81% of college freshman have at least one credit card. And for good reason. Credit cards enable online purchases—from text books to concert tickets, make it possible to rent a car, and help with medical emergencies or vehicle breakdowns. Used wisely, credit cards can be helpful throughout college, and can assist you in the development of financial management skills. As soon as you get your first credit card or loan, you have entered the world of credit reports and scores. A credit report is compiled by credit bureaus and contains information about your identity and credit relationships, among other things. Credit scoring is a system that lenders use to help determine your ‘credit worthiness.’ Credit scores are based upon your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt and the age of your accounts. It’s vital to know that your credit score affects your ability to get loans, car loans, and home mortgages. Future jobs and insurance premiums can also be influenced by your credit score. By paying your bills in full or in a timely manner, a credit card will help you establish a good credit score. Late payment or no payment will help you earn a poor credit score. For more information on credit reports and scores and how they affect you, check out CardRatings.com. Developing a new view about credit Mary Ann Campbell, CFP, founder of MoneyMagic.com and a money educator, cites unrealistic expectations as a major reason for high student debt. Campbell, who teaches personal finance courses, says “Many students’ expectations of their earning potential after college far exceeds what their actual income will be.” She notes that some students use their credit cards with abandon during college, planning to pay off their debt when they land that great job after college. Indeed, some students forget that in order to get to the top of the career ladder, there are a few rungs, i.e., less paying jobs, they have to climb first. And the expense of starting a new job and life on your own can just add to existing debt. Manning’s website, CreditCardNation.com, contains a great resource for students seeking a more realistic view of the first few years after college. Using the ‘Budget Estimator,’ a module designed by Manning, students can identify an average yearly or monthly starting salary for jobs in their particular major. The program automatically figures in estimates for taxes and social security payments. Students can then plug in expenses for housing, car payments, utilities, food, insurance, telephone and internet bills, clothing, credit card bills, student loan payments, and entertainment, etc. The module lets you know when you have spent more money than you make, and allows you to adjust payments as necessary until you get the hang of how your money is best distributed. Students that seem to have the most credit woes? Those who believe their standard of living during and after college should not vary from when they lived at home on their parents’ income. Cable television, cell phones with cameras, and new cars become ‘necessities’ instead of nice extras. Advice to grow on When it comes to credit cards, students have great advice for other students. Heather, a college junior from Arkansas, recommends getting one card with a low limit. “This limits the amount of credit you have access to and therefore removes the temptation to spend more than you have or more than you can pay off immediately,” she says. Another student recommends selectivity. “Don’t sign up for a card that charges an annual fee to use it, and read the terms of the card before applying. You wouldn’t believe how many people don’t know what an APR rate is.” For more information on finding the best rated cards, check out CardRatings.com. You can read reviews of cards from other students and get the lowdown on perks of various credit cards. Campbell has three recommendations for students: The first is open communication. Campbell says students who are educated about financial matters seem to have a better overall attitude regarding credit cards. Students should find a trusted source to talk openly with about money issues. Second, students should switch from spending behaviors (such as shopping) to activities that help you achieve the same feeling of gratification or reward, such as intramurals, exercise or campus organizations. Last, but certainly not least, enroll in a personal finance course as soon as your schedule allows. Says Campbell, “If it’s not required coursework, take it as an elective. You will learn a set of life skills that will not only help you right now, but also after college and for the rest of your life.” Rebecca Lindsey is a Senior Staff Writer for http://www.CardRatings.com. She began writing articles about consumer credit issues for http://www.CardRatings.com in September 2000. Written by: Rebecca Lindsey. Student Credit Cards Basic Guide Student Credit Cards Best Way To Build Credit History Student Credit Cards What Every Parent Must Know The Advantages Of Owning Student Credit Cards The Proper Use Of Student Credit Cards The Rewards Of Student Credit Cards Tips To Follow Before You Make An Online Student Credit Card Application Understanding Credit Cards And How They Can Be A Financial Tool What Sets A College Student Credit Card Apart From Other Credit Cards Why Should College Students Care About Their Credit Score 5 Ways To Control Your Spending With College Student Credit Cards Applying For A Credit Card With No Credit History Tips You Need To Know A Guide To Finding The Best Student Credit Cards College Student Credit Cards Credit Cards For College Students Finding The Best Available Finding The Best Student Credit Cards Getting A Credit Card Without A Credit History Money Management Tips For Students With Credit Cards My First Credit Card Smart Credit Card Habits For Students What Sets A Student Credit Card Apart From Other Credit Cards A College Loan May Be Unnecessary If You Get Scholarships Or Government Grants Credit Education Climbing Out Of The Bottomless Pit Called Credit Card Debt College Student Credit Cards How To Choose The Best One StudentCreditCards Credit Cards Knowing This Can Save You When Choosing One Credit Cards On Demand Different Types Of Credit Cards And Their Advantages Discover Credit Cards A Look At The Top 3 Every Company Whether Big Or Small Needs To Obtain A Business Credit Card Find Your Best Student Credit Cards How To Apply For A Credit Card Without Credit History How To Get A Credit Card With No Credit History How To Get Excellent Credit Cards Online Today Our World Of Credit Cards Which One Is Right For You Rebuild Keep Good Credit Ratings By Understanding Your Credit Cards By David Hall Selecting The Right Credit Card Student Credit Card Student Credit Card Or The Bank Of Mom And Dad Student Credit Cards Student Credit Cards 101 A Student S Guide To Credit Student Credit Cards Are A Step Towards Financial Responsibility Student Credit Cards Benefits And Dangers Student Credit Cards First Step To Financial Independence Student Credit Cards Online Student Credit Cards Tips To Build Credit Worthiness A Great Credit Score Student Credit Cards What You Should Know Tips For Finding The Best Student Credit Cards College Student Credit Card What Every Parents Should Know Are Students Getting In Over Their Head With Student Credit Card Debt Instant Approval Student Credit Cards Considerations When Filling Out A Student Loan Application Student Loan Information Student Loan Refinancing How Do I Pay It Back Student Credit Card Balance Transfers Building A Credit Report Lenders Will Love You For A Credit Card Required For A Free Credit Report Every Company Whether Big Or Small Needs To Obtain A Business Credit Card Give Yourself Credit Let Your Business Soar With An American Express Business Gold Credit Card Tips For Managing Your Credit Cards Zero Interest Credit Cards Discover Credit Cards A Look At The Top 3 More-student-credit-cards Teenagers Beware Credit Card Companies Are Keeping A Close Watch Hush Online Secret Credit Cards For Everyone What Are Instant Approval Credit Cards And Are There Any Benefits To Obtaining One Dos And Don Ts Student Loans Building Your Own Credit History Preparing For A College Tuition Finding The Right Credit Card Even With Bad Credit Student Loan Loan Magician Making Your Business Credit Card Work Smarter Thinking Of The Future Universities Student Loans A Renter In Debt Take Out A Bad Credit Personal Loan New Semester Perfect Time For College Students To Adopt New Personal Finance Attitude Federal Loan Consolidation Processing Credit Cards Amp Amazing Innovations Low Interest Credit Card Offers Student Loan Consolidation How To Make A Wise Decision Haunting Student Loan Debts Obtaining A Bank Credit Card Top Reasons To Consolidate Your College Loans Credit Cards On Demand Students Need To Budget No Bank Account Credit Cards Student Savings Save Paper Save Money Canceling A Bank Credit Card Consolidate College Loans Low Fixed Interest Credit Cards How Bankruptcy Affects Student Loans Bankrupt By 21 Years Old Whose Fault Is It Student Housing Assessing Your Options Credit Cards Knowing This Can Save You When Choosing One Bad Credit Student Loans What Are The Options Evaluating Credit Cards And Their Services Consolidating Your Government Student Loans How To Get Excellent Credit Cards Online Today Student Housing Choosing Where To Live 10 Most Popular Types Of Credit Cards That You Should Know My First Credit Card Selecting The Right Credit Card No Credit You Will Need A Bad Credit Loan Establishing Credit Strategies And Guidelines Simplifying Your Search For A New Credit Card Types Of Credit Cards And Their Advantages Types Of Credit Cards And Their Advantages Different Types Of Credit Cards And Their Advantages 2 Types Of Graduate Loans 3 Reasons You Should Consolidate Your Student Loans 4 Important Facts About Student Loan Consolidation How To Pick The Right Credit Card For Your Spending Habits 3 Things You Should Look For In A Student Loan Consolidation Lender Student Credit Cards Tips To Build Credit Worthiness A Great Credit Score Understanding Credit Cards And How They Can Be A Financial Tool 5 Benefits Of Student Loan Consolidation Various Types Of Credit Cards Part 2 5 Great Benefits Of Online Learning Our World Of Credit Cards Which One Is Right For You 5 Things You Need To Know Before Securing Any Student Loans Rebuild Keep Good Credit Ratings By Understanding Your Credit Cards By David Hall 5 Ways To Fund Your Child S College Education Rebuild Keep Good Credit Ratings By Understanding Your Credit Cards 5 Ways To Pay For College 5 Ways To Control Your Spending With College Student Credit Cards 7 Tips On Getting The Best Rates For Student Consolidated Loans A Guide To Bank Credit Card Applications 80 Billion Dollars Available To Students For Education Rebuild Amp Keep Good Credit Ratings By Understanding Your Credit Cards A Guide To Paying Back A Student Loan Money Management Tips For Students With Credit Cards A Guide To Student Grants And Scholarships Applying For A Credit Card With No Credit History A Guide To The Federal Direct Student Loan Program Getting A Credit Card Without A Credit History A Guide To The Florida Repay Teacher Student Loans Program |
A Guide to Finding the Best Student Credit Cards
Student credit cards annually bombard freshman as they enter college. It has become a fall ritual. Parents should be vigilant in discussing the importance and responsibilities that go along with having a credit...To Continue Click Here No Bank Account Credit Cards Unfortunately, the options to get a new credit card are severely limited for people with less-than-desirable credit histories. The restrictions are so stern, in fact, that many consumers with bad credit are unable to buy simple consumer goods, or... Continue By Clicking Here No Credit You Will Need a Bad Credit Loan So you have never taken out a loan? You don’t have a credit card and you don’t have a mortgage? You always pay cash? You’re a student, a recent widow, a divorcee or from an ethnic minority group who have a tendency not to have any lines of credit?... Continue By Clicking Here
|
| SITE_COPYRIGHT :: Privacy :: TOS :: Contact | |
