Using Student Credit Cards

                                                                                         

College students can start building that all-important credit history with student credit cards. Next to a checking and savings account that offers a good amount of flexibility and low fees, a student credit card is one of the most important tools a young person can have starting out in life.

The fact is that in many cases no credit is worse than bad credit, because like so many individuals, lending institutions are wary of the unknown. Even if one is able to secure well-paying, steady employment right out of college, banks will not write car loans or home mortgages without some kind of credit history – and student credit cards are an excellent way to get started.

There are some issues to keep in mind when applying for student credit cards. One is the issue of no prior credit history; in order to successfully apply for student credit cards for the first time, it’s often necessary to have a co-signer with a strong credit history. Credit card companies do this in order to protect themselves; should the cardholder default for any reason, the co-signer becomes the party responsible for repaying the balance. For this reason, it’s an excellent idea to compare the terms offered by several different companies.

The other thing to keep in mind is that the interest rates on student credit cards are likely to be high, while the amount of the credit line is unlikely to exceed $1000. This is for the cardholder’s protection as well as the credit card company’s. By establishing a reliable payment record however, it should be possible to get much more favorable terms in a reasonably short period of time (typically a year or two).

In the meantime, used prudently, student credit cards can be valuable tools; many even offer rewards and incentives. The Discover® Student Card is one such instrument; cardholders earn unlimited cash rewards, including up to 20% rebates for online purchases.

The Bank of America Student VISA Platinum Plus Credit Card is one that requires no cosigner. There is no annual fee, and one can access his/her account online. In addition, this student credit card offers protection against fraud and identity theft – a real danger when shopping online if one does not exercise proper caution.

You may find that student credit cards such as these offer “0% Introductory APR.” Keep in mind that these rates are introductory; after the first six months, they can go as high as 16.99%. However, many student credit cards offer an interest-free “grace period” for balances paid in full every month – another incentive for using these cards in a prudent manner.

Those who are eligible for student credit cards are at least 18 years of age and are enrolled in a two-year college or four-year college or university.

About the author:
Susan Slobac is a personal financial advisor. She specializes in working with individuals to improve their credit rating, build assets and maximize the benefits of cash back credit cards.


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