Lowdown on Credit Cards for College Students

Posted by Nick Niesen on October 29th, 2010

Are you a student pursuing a certain course in college? How do you pay for your college expenses? Surely you might be buying gifts for your loved ones or gifting your friends on their birthdays or other occasions. Also one needs to buy other commodities like T-shirts, books, and shoes from stores. Student credit cards can prove to be a boon for high school as well as college going students. There are many good reasons to have a credit card for college students simply for the benefits that they offer.

Benefits of Credit Cards for College Students

Credit cards do away with carrying a lot of money in your wallet, give insurance against purchases, allow you to shop online, and they also prove to be a sort of cushion in case of any emergencies. There are a few companies offering credit cards specially custom-made for college students. Most of the companies have their kiosks and stalls at college campuses advertising their products and providing card details to the students.

Credit cards help build a credit history for students. After graduation, a good credit history can help finance expenses for buying a new apartment or a new car. This is because companies often look at the summary of the credit report before allotting loans for a house or a car. Hence a good credit history can make availing a loan relatively easier. One should have a clean credit report in order to get the loans sanctioned. If the credit report contains a lot of unpaid bill summaries then it becomes difficult to avail a good loan and other associated benefits.

Disadvantages of a Student Credit Card

However credit cards also have their disadvantages. They carry high finance charges for unpaid bills at the end of the month. These finance charges can be as high as 20%. Also, there are yearly membership fees which range anywhere between $25 and $100. In addition, not paying expenses on time can lead to very high interest rates.

Hence it is better to buy a credit card for college students only if one has the capability to pay all the finance charges and the bill amount on time. Not paying finance charges and the unpaid bill amounts on time can lead to suspension of services and the student can get a bad credit report.

Tips for Selecting Student Credit Cards

You need to be aware of some basic rules for buying a college student credit card.
-First, read all the conditions carefully before signing on the dotted line.
-Get answers about how much interest rate the card carries as well as the interest rate for cash advances.
-Study the penalties or interest rates to be paid if the bills are not paid on time.
-It is also better to use a debit card instead of a credit card. This is because with a debit card, the amount is deducted from the account where funds are already deposited from the beginning. Hence subscribing to a debit card ensures that you can?t spend more than the money you have in your account.
-You should use a credit card only if you are certain that you will be able to pay the debts on time. As far as possible, cash should be used for buying items. One should use a credit card only for emergency purchases.
-It is better to get only one card from a company after comparing the services provided by all companies. Do not get two or three credits cards from different companies as it leads to a lot of hassles like remembering the due dates for paying bills, extravagant expenses, etc.

Hence, as mentioned before, students should buy credit cards only if they have the capacity to pay all bills on time and also exercise control on their spending habits. Student credit cards help teach teens how to handle credit. Also, credit cards for college students allow them to build a good credit history if a student credit card is used in moderation.