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| How Will Student Credit Cards Help My Teen? |
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In countries like USA, Canada, and the UK where college education is expensive,
a student credit card proves to be handy in the event of a huge cash crisis.
Student credit cards are useful in situations when students desperately need
money to pay off their expenses. Major credit card companies like American
Express, Visa, and MasterCard offer student credit cards with various
incentives. Many credit card companies offer student credit cards with low
interest rates and good offers.
Choosing a Good Student Credit Card
Any credit card company that issues a student credit card with low or no
interest is good enough. Look for the best student cards - those that lend money
at a cheaper rate and for a longer term. Most credit cards offer funds starting
at the rate of 19% and higher for students. A personal bank loan can even be in
the range of 6%, provided you are eligible for it. Several on-campus sources
like student unions, departments, and the university itself along with some
private sources, offer scholarships and hardship bursaries.
Many students
prefer to own more than one credit card which has its own pros and cons.
However, some naïve students pay interests that are as high as 20%. They need to
be educated on how to negotiate a good rate, opt for a 0% balance transfer etc.
In short, this card, like any other, should be used intelligently and
economically.
Tips to Use a Student Credit Card
1. Plan, plan,
and plan your budget - Spending can be controlled by planning a budget, thus
preventing bad credit. A credit card statement is the best way to decide your
budget. List all the weekly and monthly expenses like food, books, bus fare,
etc. and prioritize your expenses.
2. Stick to the budget plan - use the
card only for unavoidable expenses. Plan the budget well in advance and follow
the planned weekly and monthly expenses as you decided. Pay the balances on
every statement, in time, and prevent debts from building up.
3. Use your
credit card for major purchases - Use the credit card only for big buys and
long-term purchases like furniture and books. Some credit cards for college
students charge higher interest rates. Hence, to prevent debts and a bad credit
record, credit cards for college students need to be used carefully.
4.
Avoid overuse - Use the card very cautiously. Avoid overspending, for example,
buying CD's on the internet and spending on beers and sodas for friends.
5.
Avoid any help from your parents - Understand your responsibilities and control
your spending habits. Use available financial resources judiciously. Parents
should stop paying the debts of their wards and teach them to use credit cards
intelligently. This also helps in encouraging their children into taking their
own responsibilities. Parents can also put a limit on the card to curb splurges.
Effect of a Credit Report
Many employers check the credit report
of fresh graduates. Good credit history always helps in getting good job offers.
Keep the credit record debt-free before appearing for job interviews. A better
alternative to a credit card for a college student is a prepaid debit card. This
keeps you out of debt because it sets limits on your spending.
Some
parents oppose the idea of providing their children with student credit cards.
But these cards help a student learn to be a good manager of available finances.
Credit cards for college students help students in obtaining practical
experiences of managing available finances. Parents should educate their child
about the risk involved in using credit cards. Make them aware of the threats of
a debt, even before they enter college. To be on the safer side give them a
prepaid debit card to help them avoid a crisis. Therefore, student credit cards
actually help the growth of a young individual into a mature one.
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