Many financial institutions offer credit card facility to the college students. While and some banks provided as an add-on with their parents credit accounts, some other banks provide the standalone types.
Credit cards will help the students in learning to handle their money. Some of the other features of credit cards for students are low interest rates, no annual fee, and transaction fee. It is one of the best ways to improve the credit scores at a young age, provided that they use the credit facility wisely.
Some of the features provided by the companies are:
Fraud liability guarantee gives fraud alert messages and other possible warnings.
Financial tools will be useful for students, and it will help them in spending smarter. They also guide the students in being of their debts faster.
They provide 24X7 customer support assistance, and free consultation to cope up with debt problems.
Things to consider before applying for a credit card
If your age is below 21 years then you have to keep in mind few things before going for it. Students will require co-signer to open a credit card account for students. This is required because the young people don’t have a large income. As per the new federal law it is very tough to get a credit card for the students without a co-signer.
At the same time parents should maintain a stronger credit score, so that they can handle the crisis that happens due to student credit card. It is good to research about the credit card companies and to choose one that works best for you and your budget. Some students try to buy more than one credit card, which will definitely lead to terrible debts.
During college days you can manage with a single account and that will be more than enough to cover your day to day finances. Before opening an account you must read about the terms and conditions and also educate yourself about the usage of the student prepaid card.
First time credit card holder:
Most of the young people get a credit card for them after graduation from the high school. For many, it will be the first time to handle money on their own. If you are a college student, then you will be living with limited income so it is important that you don’t pile up large payment dues, which can’t be paid back. Then you have to pay the over dues along with some interest charges.
Try to spend the cash within limits, so that you will pay back the monthly bills properly. It is also good to set up a reminder to notify you some important information like missing payments and payment dues. If you are away from your home you will be tempted to use your credit card for unnecessary things like movie shows and concerts.
Instead the students have to use it for any unexpected expenses and avoid using it for any luxury purchase. You can also curb the cost by looking out for some discounts and promotions. If you are using a credit card to buy some books then browse online to find any discounted copies. These saving strategies will aid first time card user to have a better credit history throughout their lives.
If you lose your credit card report it immediately to the company, so that a new card will be issued to you and the old card will be blocked. Protect your credit card pin numbers and don’t write them at the back of the card or any paper. It is also very important not to let others to use the card.
Different credit card options available:
It is very essential to decide upon the right credit card. If you are using a credit card for a long period of time, then it will strengthen your credit score well. A prepaid student credit card will be helpful to the students in using their money reasonably. Bills and interest rates are not imposed on this kind of card. This also suits the individuals with bad credit scores.
These prepaid cards are like prefunded money, and it serves as a tool to improve the money management skills. You can use it in the same way as traditional credit card for paying tickets, pay bills, or for purchasing anything. If you are looking to bend your credit history, then you may opt for this type of card.
The student’s credit cards are designed exclusively for them and also offer some cash back rewards. It is good to take a note of the credit card limit that is offered by the bank. Some of the money lenders set $1000 as the credit limit, which avoids high debts.
How to choose the best credit card?
When you shop around, you will find numerous credit card unions, finance corporations and banks offering credit cards. Compare the offers provided by them to find out the best deal.
Select the card based on the lowest APR offered because only a minimal charge will be added to the payment dues and it will reduce your burden to a great extent. Some companies provide reward points to the students who pay back dues on time.
Some of the things that you must inquire are:
If the annual percentage rate (APR) is a variable rate or a fixed rate
About the charges for exceeding the credit limit, and for making late payments.
You must be aware of some student credit card providers, because they intend to make easy money by imposing additional charges. In order to avoid these things, you have to read the terms & conditions carefully before signing up for the card. If you are not familiar with the usage of the card, then you could seek advice from any good credit card agent.
Parents can guide their children in building management skills, and they should also discuss with them about what type of purchases the card should be used for. Some of the things that the student can avoid are buying garments, eating at restaurants, spending on friends, etc.