Student Credit Cards for College and University Students

College Student Credit Card

If you’re a parent of a college student it may be a source of great anxiety.  If you’re a student getting ready to start the next stage of your life, it’s another piece of freedom that you have been waiting all of your life to gain.  What is it?  Your first credit card.

 

College student credit cards have been the subject of debate and controversy.  Some argue that credit card companies are targeting the less than responsible spending habits of college students.  They’re offering students a credit card knowing that money will most likely be made in finance charges, late fees, and high interest rates.  Additionally, colleges and universities often receive kickbacks from the credit card companies for allowing them to set up booths on campus, send offers to students and parents on the university mailing list, and give students the offer they can’t refuse.  Colleges and universities selling student information to credit card companies is sometimes seen as a conflict of interest.

Others argue that learning to spend wisely and hopefully build a credit history should start as early as possible.  If a credit card with a responsible limit is established, it may be the perfect time to build a positive credit report especially when most students aren’t bogged down with other financial obligations like house and car payments and the expenses associated with having a family.

If you believe that college student credit cards are right for your child, there are a variety of options available in two major categories.  First, if an actual unsecured credit card is desired, very attractive cards geared towards students can be found.  Some give extra rewards points for the types of the typical college student purchases like books, music, movies, and food and normal points for all other purchases.

 

The interest rates on these cards are at a manageable level but like any credit card, students should practice good credit habits by paying the full balance at the end of each billing cycle.  Many cards have an introductory rate as low as 0% and no annual fee.

There is another class of college student credit cards that aren’t actually credit cards but represent an option with less risk of abuse or irresponsible spending habits.  Parents can take out a prepaid credit card where a set balance can be added to the card at selected intervals.  This does not build a credit history but prevents the student from getting overwhelmed with credit card debt.

Many of these prepaid cards come with helpful benefits including no annual fee, free automatic bill pay, and free e-mail and text messaging alerts with information on the card’s current balance.  Additionally, places like Western Union and many others serve as places where money can be added to the card.

Legislation protecting college students from unlawful credit card practices has been proposed but if you believe that a college student credit card is a good idea, many options are available.  As always, going to one of the many popular websites that compare the numerous credit card offers is the best place to get started.

College is where many of us get to enjoy our first taste of freedom and living pretty much in the manner that we desire. Along with this newly found independence, comes financial freedom and responsibility. Because of this, many new college students today are in the marketplace for college student credit cards. Students see all the enticing college credit cards available with all of the unique rewards, points and cash back offers available sound so great and many students do not know exactly which way to turn. And unfortunately, many students decide to apply and begin using college credit cards anyway, and for all the wrong reasons. Students start by using these cards to live above their means with frivolous purchases (pizza and beer), and then graduate to purchasing expensive items for their dorm rooms just to impress their peers and so on and so forth.

College students receive advertisements and even applications from credit card companies for college student credit cards in the mail, their email inboxes, in their new textbooks at college book stores and even in the college newspapers. Many of these are stamped with the very enticing words “Pre-approved”. Since these gimmicks are so appealing, students are more than willing to apply for these types of college student credit cards. Some credit card companies such as MBNA even offer credit cards for specific students such as those belonging to a certain club or alumni association. A college credit card can be beneficial, but only if the college students remember to read the fine print. These cards may sound very appealing, but they are credit cards and they all have a downside.

Many companies that offer college student credit cards understand the majority of college students only pay the minimum monthly payment and incur late fees and of course interest fees on their balance. This can begin to add up quite a bit of profit for the credit card company. The reason they offer cash back is to entice students to pay off their balance in order to receive cash back, however the interest rates and fees on these type of college student credit cards is normally very expensive. To get college students to apply for this type of card, they offer all kinds of incentives including a low interest rate as an introductory special. But the majority of the time the interest charges can accumulate and can end up being costly.

But the most important thing to remember is that if the student does not pay attention to his or her spending with college student credit cards he can seriously damage his credit. Once their credit rating is damaged they may be turned down for employment, purchasing a new car, or even a loan to purchase a home.

Learning how to read and understand the terms and conditions of college student credit cards is one of the most important things students should do prior to applying for a college credit card.

If you are a college student or are the parent of one, you know how important it is to have the means to pay your monthly expenses like rent, gas, and food – not to mention tuition and books – using cash alone. The convenience of a credit card is undeniable, since it can be used in thousands of locations around school and around town.

Of course, the other major benefit to having a credit card, in addition to convenience, is the ability to borrow money from the issuer on credit (hence the name, of course). As everyone knows, the ability to borrow can be quite nice at times. But, it comes at a hefty price: monthly interest charges.

Interest charges can be completely avoided if you pay down your card’s balance at the end of every month. But, most people do not do that. Sure, for a month or two after first getting the new card, it is fairly easy to pay down one’s balance completely. But, over time, the balance seems to grow and grow until it is out of control.

If you are looking for the best college student credit card offers, here are 5 things to consider:

1. Credit card issuing companies will use cash-back incentives and cool-looking card designs to get you to join:

Banks and other credit card issuers typically use various marketing incentives like cash-back incentives and attractive-looking credit card designs depicting scenes like a nice tropical beach, the Manhattan skyline, or the Amazon forest. Of course, the cash-back incentives can be helpful, but they are usually small. And if you take advantage of these incentives but fail to pay down your monthly budget, your total interest payments will likely outweigh any benefit you gain from them.

2. “No annual fee” is another common marketing technique:

Another way that credit card marketers who cater to college students will try to appeal to students is through offers like “no annual fee.” Unlike cash-back and cool card design gimmicks, this one has some pretty serious teeth in it. Still, don’t be fooled: paying a high interest rate on a sizable balance will wipe out any benefit you realize from not paying an annual fee.

Regarding #1 and #2 above, it is best to see through these marketing tactics and instead to focus on #3 (below).

3. Interest rates for college students tend to be very high – often 14% to 22%:

When it comes to selecting the right card for a college student, it all boils down to interest rate. Obviously, the lower the rate the better. But, anything above 8% means some pretty hefty interest payments each month if you run up your balance.

4. College students are notorious for running up their credit card debt:

At this point, everything circles back to one hard, cold fact: most college students – even the most responsible among them – are prone to running up their card balances in very little time. In fact, many student cards become maxed out just months after the student receives the card.

5. Consider the alternative of a prepaid debit card:

What is an excellent alternative to looking for college student credit card offers? The answer: a prepaid debit card. These cards feature the symbols of companies like Visa, Discover, and MasterCard, so you can use them wherever credit cards are accepted. But, because they are prepaid, the user can never have the chance to run the balance up too high. Even better, there is no application process or credit check required: just purchase and use. This is a great way for students and/or their parents to take control of their monthly spending while in college.

Consider these 5 things as you look for a college student credit card. And, consider the alternative of using prepaid debit cards instead.

 

 

 

 

 

 

 

 

Free Credit Card Tips

You can negotiate with an existing credit card issuer for a lower rate. Call customer service and ask!

Shop around for the credit card that best fits your needs; low annual fee if you pay in full, low interest rate if you carry a balance.

Make sure you understand a credit card’s terms before you accept the credit card.

Pay bills promptly to keep finance and other charges to a minimum.

If you pay late your APR can be raised!

Hold on to receipts to reconcile charges when your credit card bill arrives.

Protect your credit cards and account numbers to prevent unauthorized use.

Draw a line through blank spaces on charge slips so the amount can’t be changed.

Tear up carbons.

Keep a record, in a safe place separate from your cards, of your account numbers, expiration dates,

and the phone numbers of each issuer to report a loss quickly.

Carry only the credit cards you think you’ll use.

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