College can be a rough time for students. An introduction to the real world, it’s perhaps the first time many teens experience the freedom of living on their own. But with that freedom comes much responsibility as the old phrase goes. Learning to fiscally run one’s life appropriately and building a solid basis for credit are perhaps two of the cornerstones for success down the road. A student credit card, when handled properly, can become a valuable tool in the pathway to a bright future.
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When credit assessment agencies calculate a credit score, they look at the person’s credit history. Having a history with a credit card gives the agency something valuable to look at. They take into account such things as punctuality of payments, how quickly debts are paid off and what percentage of a credit limit was accessed. If a credit card is used regularly with debts paid off in a timely manner, a student can over time steadily raise their credit score. The key is paying off debts in full at the end of every month when possible.
Online bill pay is also a valuable tool that most credit cards provide. Through one site a person may access all of their bills online and allocate funds prior to the bills due dates. This makes budgeting money a breeze and can help prevent students from forgetting to make payments. This method further helps their credit score.
Carrying plastic instead of cash can also provide some much needed security. Should someone steal a person’s credit card, the theft can simply be reported, leaving the owner with all their financial assets intact. The majority of credit card companies will even completely cover the costs of any fraudulent charges made from the moment the card left the owner’s possession. In addition, companies may also replace the card for little or no fee.
Student credit cards typically come with an interest rate slightly above those of a regular credit card, averaging about one percent more which is considered nominal. Unlike regular credit cards, they require little, if any, prior credit since their primary purpose is to serve as a first line of credit for new students. Most companies will offer special programs such as cash back, redeemable points or special lower interest rates for small purchases.
It is important to keep in mind that since the passage of the “Credit Card Bill of Rights” by the Senate and Congress in May, there have been some strict new regulations regarding the practice. Students under the age of 21 are now required to have co-signer on any card applications and must gain approval from any joint party before extending their credit limit. Student credit card providers are also discouraged from advertising themselves freely around college campuses now, so finding a credit card could require a little more research, which could actually prove to be more beneficial to students looking to get the best deal possible.
In the end, if a student wishes to have a credit card, a Student Credit Card is the way to go. Though they do come with fees and interests rates, the convenience they provide to many, especially in the case of an emergency, may outweigh the extra costs.
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