Posted on Friday, 22nd April 2011 by Timothy Bell
What was it Jack Nicholson said? “You can’t handle the truth!”
No, the truth about student credit cards isn’t all that drastic, I promise! Credit is a fact of life; everyone needs it if they want to get what they need. Yes, that even includes a job. So, having a student credit card is not a bad thing because it is a necessity.
Wrong Reasons for Opening a Student Credit Card
Having said that, students need to be cautious when applying for a credit card for certain reasons. They shouldn’t apply for the one that gives away what they consider the coolest gift. You know those gifts, the hottest new CD or a free t-shirt to add to your closet.
Students should make sure they aren’t applying to credit card companies because they are giving away free stuff in general. Having too many open lines of credit doesn’t look good if you have to apply for student loans.
How Student Credit Cards Affect Credit
Each time a credit application is submitted, your credit score can lower for a set amount of time. Trying to keep your credit score as high as possible is necessary. Having lower credit scores can make it more difficult to get student loans, a car loan or a mortgage when you’re ready to buy a home.
Credit card companies are going to cater to the college students for their own reasons. The primary one is loyalty to their brand. Most likely, the first company a student associates with is the one they are going to stick with and upgrade future credit cards.
A student credit card can carry higher interest rates just because students are new borrowers and may need to get that credit. This can be an incentive to the student to make sure and pay the credit card off each month. This will help in not only building their credit, but budgeting as well.
There are unfortunately going to be students who like the privilege of having a credit card and start shopping away on it. What they may not understand is, if the credit card is not paid off monthly, their $50.00 pair of jeans will end up costing them well over $200.00 by the time they pay the credit card off. This is due to interest and possible fees if they are late paying bills.
Pros and Cons of Student Credit Cards
Students are very easily able to obtain credit cards, which can be both good and bad. The pro for the student is it is easier to start building credit. A con for the student is it is easier to get sucked into the land of credit card use and have no idea how to pay the balances back.
A pro for the credit card company: More incoming money from interest and possible fees, while the major con is the possibility that the student doesn’t make their payments.
Similar Posts:
- Establishing Credit with Low Limit Student Credit Cards
- Understanding Student Credit Cards
- Do I need a credit card for college?
- Need to boost your credit score?
- See Your Credit Score for Free Starting July 21! …But Only If You Apply For Credit.
Tags: Cards, Credit Cards, Student Credit, Student Credit Cards
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