Credit Card Guidelines for College Students

According to a survey, the average freshman student has more than $1,500 worth of credit card debt.  That staggering figure was revealed by Nellie Mae in 2005.  Students have a very substantial amount of debt even before they graduate, and become a member of the workforce. 

 This situation is dire, yet much can be done so this does not happen.  Just by teaching students to use their credit cards responsibly, they can protect themselves from the threat of bad debt and in turn build up a solid credit history.  In this article, we have presented simple but valuable steps on managing a credit card, especially for young people and college students. 

Don’t fall for credit cards with introductory rates. A credit card with a reasonable interest rate that would last is a better option than a credit card with zero percent introductory rate that is bound to skyrocket after only six months or so.  Since it will be your first time, you need a reliable credit card – one that can help you establish and maintain a good credit history. 

Know what you have to pay for. Aside from a low interest rate, be sure to check out what the other fees are as well.  Check the annual fee, late penalty, over-the-limit fee, and other transaction charges that you may incur once you use your credit card. 

Credit card rewards. If you plan to get a student credit card with rewards, be sure that you will be able to pay completely every month.  Otherwise, you may get charged with a high rate of interest.  Better yet, if you’re not sure whether the rules of the reward program fit your lifestyle, go with a non-reward credit card with a low interest rate. 

Stick with one credit card. Many young people get at least two or more student credit cards, thinking that more accounts would boost their credit rating.  But achieving a high credit score does not depend on the number of credit cards you own.  On the contrary, a good credit score depends on how well you can manage each account. 

Thus, even if you own just one credit card, if you use it regularly and you are consistent in submitting your payments on time, you can surely build good credit and make a good impression to future creditors. 

As a student, it is strongly recommended that you stick with one account to avoid the risks.  First, having multiple credit cards may encourage more spending, since you can always charge it to one of your credit cards and pay at a later time.  Second, managing different credit card accounts can prove to be difficult especially if you have incurred a balance on each card.  Also, paying off your debts can become a burden and if you fail to pay on time, you will be charged with additional fees on interest rate and late penalty, charges.  All these trouble can be avoided by focusing on just one card. Additionally, student credit cards often have very high interest rates (that’s what you usually get when you have little or no credit), so stacking up those credit cards also means stacking their interest rates against you. 

Spend wisely. Ultimately, avoiding the bad credit trap will depend on your own spending.  Before charging purchases to your student credit card, see to it that you will be able to pay on time.  Always remind yourself of the possible consequences.  And if you’re not certain whether you can pay on time, then do not charge it on your credit card.

Good Credit Tips for Students

The most thrilling thing about being a college student is becoming more independent. Financial advisers do recommend that the best time to begin building credit history is while you are a student. With the modifications to the credit card law, it is still a lot easier for a student to get his/her first credit card. If you are a student yourself, what should you to maintain a favorable credit record? Here are some tips:

1.Choose the right credit cards for students. For people who are below 21 years old, they can apply for a student credit card with the help of a co-signer. On the other hand, if you can prove that you have an independent source of income, you can be eligible for a student credit card even without a co-signer.

When selecting your first credit card, ensure that you understand the Terms and Conditions of your bank or credit card issuer. Remember that there is certainly not one credit card that will match everyone’s lifestyle. Thus, you must examine your own needs and look for a credit card that will match up to your lifestyle.

A credit card with a low interest rate is best as it minimizes the risk of debt build-up should you need to occasionally carry a balance in your account. Even so, keep in mind that the surest way to maintain good credit history is to use your card only on important expenses and to pay off your complete balance on time.

2. Use your credit card regularly. Simply placing your student credit card in your wallet is not going to help you build good credit. To be able to build credit, you should demonstrate your capability to manage debts and repayment. Use your card on important purchases but keep your charges minimal so you can make your payments on time.

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Building Good Credit with Your First Credit Card

The significance of building a favorable credit record has always been highlighted by credit help specialists. As the interest rate continues to increase, building a good credit rating is definitely an important step today. Aside from the opportunity to obtain quick approval, an outstanding credit history can win you the lowest possible rates and flexible repayment terms from loan companies and insurance providers.

For people looking for work, good credit can spell the difference between getting employed or not. Although a hiring officer cannot turn down an applicant based on his/her credit rating alone, it can be a significant factor that will give you the advantage over other applicants competing for the same position.

For this reason students in college are urged to start building credit history by obtaining their student credit cards. Once you have your first credit card, what are the steps you can do to make sure that you will build good credit? Take a look at the following suggestions:

Check your credit report. It is not unusual for credit reports to contain errors. There are instances when someone else’s credit details may get mixed up in your report and inflict damage to your score. Identity Theft is also a common cause for having bad credit.

Consumers are eligible for a free credit report each year from the AnnualCreditReport.com. It is important to check out your credit report at least twice a year to make sure that it contains accurate record.

Understand how credit scoring works. Knowing how your credit score is determined can help you become more mindful on maintaining your credit report. You must remember that payment history or timeliness of payment makes up 35% of your total rating. Therefore, even occasional late payments can hurt your rating.

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Credit Building Options for Students

As you make way towards the corporate world, you must strive to build personal credit history as well. Thus, by the time you graduate from college, you’ll be in a much better position to deal with financial companies and even potential employers.

Students have several options when starting to build credit. Consider the following options and choose one that suits you best:

Student Credit Cards. Credit card issuers grant easy approval to college students. In fact, they even distribute fliers at campuses to encourage young people to sign up. However, under the New Credit Card Law, such marketing campaigns will not be allowed within 1,000 feet at school campuses.

The New Law also restricts young adults who are under the age of 21 from getting their first credit card unless they have a co-signer or they can show proof of independent income. If you are under 21, you must have a parent or a guardian with good credit history to back up your account.

Before signing up for a college credit card, carefully evaluate your choices. Compare the rates and fees, as well as the Terms of using the card. Start with one student credit card only to reduce the risk of overspending and bad debt.

Secured Credit Cards. A secured credit card is another option since anyone can get approved, even with no credit or bad credit history. However, secured cards require a cash deposit which can range from $200 to $500 and up. The amount of deposit you make will also define your credit limit.

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How to Get Out of Student Credit Card Debt

When put to use responsibly, credit card for students is a perfect tool for establishing good credit history. A survey done by Nellie Mae, a leading student loan provider, shows that many young people graduate from college carrying an average of $2,700 to as much $7,000 cost of credit card debt.

For anyone who is currently trapped in bad debt, there is no reason to panic. Check out the following steps to wipe out your debts one step at a time.

1. Take charge. Even when your personal credit card debt looks impossible to pay, do not give in to frustration. Be positive and do the necessary steps immediately and develop strong determination.

2. Know your debts. Before thinking of a solution, you should be aware about the precise status of your accounts. Evaluate your billing statements. Get a copy of your credit profile so that you can assess your financial records.

See to it that there aren’t any unauthorized charges in any of your accounts. In case you find errors, contact your bank without delay to fix the problem. Should your creditor ignore your complaint, send a letter of dispute to the credit agency that released your report. An investigation will be conducted within 30 days. Next, you will be advised about the result of the investigation and sent an corrected copy of your credit report.

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