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A college student credit card can on one hand be helpful
to build a good credit and on the other hand end up being
a curse to a student if it is not wisely used.
For many college students it's hard to resist what seems
almost like free money with those free credit card applications
all over campus. Too many students who give in to the temptation
use credit cards and go on a needless spending spree without
any plan for how to pay off their ever-growing credit card
debt.
Most wise college students will sign up for a student credit
card soon after arriving at college or university, get a low
maximum balance, use the college credit card only when it's
needed and pay off the balances every month. This helps to
establish a stable and good credit history which in turn plays
a positive role in the financial success of the student's
future once he or she graduates.
Many college student credit card companies charge high interest
rates, around 18%, which is enormous. This in it self should
scare a student to pay off the monthly bills as fast as possible.
Some college students are adept at buying stuff on credit
and not paying for 60-90 days. Depending on how fast or slow
the merchant places the credit receipt into their system,
the payment time can become longer. This is basically an easy
way of getting an interest free student loan. However, many
college students pursue this strategy at their own risk.
There are college students that will sign up for a student
credit card and use it indiscriminately to purchase everything
that strikes their fancy. Then on reaching the limit on one
college credit card, the student goes and signs up for another
"free" college credit card. This way the student
ends up with multiple cards and a mountain of debt. This is
dangerous and highly avoidable.
Getting out of credit card debt trap is very difficult and
no new college graduate wants to step into the real world
after graduation not only with student loans, but also a mountain
of credit card debts they cannot handle.
A common college student credit card strategy is to simply
pay the minimum monthly balance. While this is a regular strategy,
it's not advisable because interest rates can be up to 20%.
Why not just give all of your money to credit card companies
now and get it over with! There are wiser ways to manage and
save your money! Those college students who pay only monthly
minimum balances on their student credit cards end up paying
hundreds or thousands of dollars in interest, and are also
sometimes charged "over the limit" fees. If any
payment is missed it affects the credit report adversely.
Student credit cards, if used prudently, can be excellent
means for college students. These cards can be used by the
student for purchasing something essential when there are
absolutely no other sources of funds available. Every student
should be made aware of the dangers of student credit card
debt and the repercussions of not making monthly payments,
before they sign up for their first credit card.
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