Both college and high-school students can be issued a student credit card. Unfortunately, students often have little or no financial responsibility and can get into serious financial troubles just because they can freely use student credit cards.
The first thing that students usually don’t realize is that possessing a student credit card is very useful for establishing a good credit history. The second thing that they don’t really realize is that actually the way they maintain the balance of their credit cards is actually having an effect on their future credit history. Irresponsible financial behavior can not only make them end up in serious debt, but also ruin their credit score at the very beginning of their independent financial lives. Most students see the sudden financial freedom and just spend carelessly. In reality, having a bad credit score can one day ruin your application for a mortgage, loan, car lease, and even work opportunities.
To prevent possible downfalls every student has to gain at least a little knowledge of how to manage student credit card debt. Before applying for a student credit card do some research first. Don’t just jump for the first offer (as any student is likely to get a lot of credit card offers). Student credit cards after all are like the credit cards issued to adults. You should look for the same factors – annual interest rate, variable rate information, the grace period for payment of the balance for purchases, annual fees (if applicable), late payment fees, any other additional charges, etc.
Don’t be tempted to apply for the first student credit card offering great deals (0% APR, 0% liability, etc). There might be a lot of sandbanks and you might end up with a huge debt and ruined credit rating. Read the small print carefully and if uncertain seek advice from your parents or someone who has more experience with credit cards.
The second rule – try to be responsible and control your spending. If necessary make a list with your expenses to actually see where your money is going. Try to pay off your monthly in full, as paying just the minimum allowed will only extend the debt period and you’ll end up paying more.
Finally, let’s look at the benefits of having a student credit card. If you pay off your obligations toward the credit card company on time, you will build up an excellent credit history. This will help you later on when it’s time to apply for a normal or a premium credit card. Having a credit card is a major advantage as you have handy cash for your daily expenses (textbooks, student supplies, etc) and especially in case of emergency. Most of the student credit cards come with sweet reward programs – travel reward points, reward points that can be used with some merchants, cash back, etc.
