Making the Grade with Student Credit Cards
It’s their first time away from home with no money for pizza and movies. But then a television commercial, internet advertisement, or even a company on campus announces a special offer for college students – financial freedom, at last. Apply online and get instant approval – instant gratification. Pizza and movies are the least of the purchases now. New clothes, electronics, and vacationing in the south for spring break have all become possibilities.
And then the day comes – the credit card statement arrives in the mail and the balance is larger than your parents give you in cash for the whole semester. Getting a job is out of the question. So, the solution comes again via hawkers of more credit cards – balance transfer. Simply transfer that balance to a lower rate card and make minimum payments. And then, that frees up that card to use again for more goodies. Maxed it out – no problem – there are a plethora of 0% introductory rate cards out there for balance transfers. Before you know it, there are 4 or more cards in all. Not a good thing if you can’t make those monthly minimum payments. All of a sudden, your credit history is in danger before you get out in the world to make your mark.
Another dangerous use of student credit cards is the ease with which cash advances are available. Just swipe the card and grab the cash. No matter where you are, there is an ATM just begging to give you money to spend. But this feature is the one that is most devastating to students. Not only is the rate of interest on cash advances higher, but there is generally a transaction fee for getting that money – in addition to the transaction fee charged by the ATM. All of a sudden, it costs you $10 to get that $20 from the ATM.
You had a hard week studying, so you treat yourself to lunch on Saturday for $10, get some retail therapy in and find a great jacket for $55, and then you and your pals get together and you buy pizza for $35. That was a relaxing weekend worth $100. So, you do that every weekend and when the statement comes, you owe $400. If you pull all of this money out in cash – it will likely be a lot more than $400.
The thing is, too – you sprung for the pizza and your friends promised to pay you back when they get paid. But they don’t get paid for two weeks; meanwhile your bill is due at the end of this week. It’s not their problem – it’s yours. Your credit is at risk, not theirs. And that is exactly what your credit card company will tell you.
These lessons as a student are hard. Late payments, charging over your limit, shuffling money between cards – these are all mistakes that are neither forgiven nor forgotten. They will show up on your credit history for years to come.
As a student with great earning potential down the road, you might not be so worried. But when you want to buy a car or a home, these mistakes could come back to haunt you. Remember that the next time your friends ask you to “borrow” money.
Quick Tip #1
Although it may be overstated, there is a lot of truth to people ruining their credit score due to missing payments and
paying their credit card bills late.The fees can pile up and the interest rates can grow before you know it.
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Quick Tip #2
Never let your cards go out of your sight and always check your receipts and your card statements thoroughly.
These are simple ways to prevent credit card fraud happening to you. If you do see a suspicious credit card statement,
then call your credit card company straight away and cancel your cards. |
Quick Tip #3
Today’s cards offer a wide range of excellent features, including frequent flier points, programs that bank points toward a new car
and cards that support charitable organizations. Other options worth having include car rental insurance coverage, trip cancellation coverage
and extended warranty coverage. |
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