College Students and Credit Cards

College Student Credit Card offers you the opportunity to enjoy the benefits of having credit, while also teaching the value and responsibilities that go along with those freedoms. It is designed for a college students and usually works the same way as any credit card that has been issued by a financial institution. Some require a parent or guardian to co-sign. It means the student's parents must agree to be the responsible party in case a student is unable to repay part or all of an outstanding credit card balance. Higher Interest rates are typically higher for student credit cards since students do not have a proven track record of promptly repaying loan balances at the credit bureau. Higher interest rates allow the banks to spread the cost of greater losses over the entire student credit card population. Lower Credit Limit, lower credit limits (typically $500 - $1,000) enable students to start building credit history while limiting the risk of loss to the bank that issued the card, because it s the first time a student has been responsible for credit, so Therefore, the student does not have any credit history or rating for the bank to draw upon to make their credit decision. In addition to student loans, college students may have high credit card debt. Eager to woo college students, credit card companies market their cards on campus with incentives such as t-shirts and sunglasses. The result – students can get credit without understanding the responsibility of handling credit.
It is important for students to establish a credit history. At the same time, using credit without knowing how can turn into a crisis. Almost 65 percent of college students have at least one credit card; 15 percent have four or more. Twenty-five percent have at least $10,000 in credit card debt.

CREDIT CARDS FOR STUDENTS

americanexpress.com

Capital One® Student Card

Discover® Card

Bank of America

MasterCard Credit Cards

Visa Credit Cards

Debit and ATM Cards

Don’t confuse debit cards with credit cards. Debit cards may look like credit cards, but they act like checks. Once the debit card is used, the amount is immediately deducted from your checking or savings account. The debit card eliminates the need for carrying cash, but it does not extend credit. Debit cards may be used as guaranteed check cashing cards. In contrast, credit cards defer your payment until you are billed.
Some cards can be used to withdraw money from automatic teller machines (ATM). Beware of fees eating up your money if you use your ATM card frequently for small withdrawals. Some financial institutions charge their customers a set fee for a certain number of transactions. Other institutions charge for each ATM use. If you get cash at an ATM machine that is not part of your financial institution’s network, the fees could be as much as $8 per transaction.
Parents might want to introduce their children (ages 13 to 17) to prepaid debit cards such as Pocket Card, American Express Cobaltcard, and Visa Buxx, by funding a card that has a spending limit established by parents. Parents supply the funds and can use the cards to teach their children how to track how the money is spent. This parent-controlled card is designed to help parents teach their teens about using credit in a controlled environment. One example of a prepaid credit card can be found at VisaBuxx.com.

Advantages and Disadvantages of Credit cards

Credit Card is an Automatic advanced card, when you used it, you can get the goods you bought without paying for it yet.Credit cards are a widely used source of convenient credit for restaurants, hotels, mail order, on-line shopping, gasoline stations, grocery stores, dental and medical care, church bazaars, as well as telephone and television advertised products. There are many advantages and disadvantages of using credit cards, but the consequences of misuse can be drastic and painful.

Advantages
.Credit cards eliminate the need to carry large sums of cash
.If you are away from home without cash, you often can receive a cash advance or have the option of buying traveler’s checks with acredit card.
.Places that are suspicious of personal checks often take credit cards.
.Credit cards act as a short-term loan if you find something that is a bargain and haven’t the cash or balance in your checking account to pay for it.
.If you move to a new place, credit cards give you purchasing power until you establish yourself as a good risk in a new community.
.If you charge an item or service that costs $50 or more in Colorado (or within 100 miles of your home) and later discover it doesn’t work or has other problems, you can withhold payment from the credit card company if you have attempted to resolve the problem with the merchant.
.You often get the best rates of exchange when traveling in foreign countries if you use your credit card for purchases and your ATM card to get cash. Check with your card issuers about surcharges before you leave on your trip. A two to three percent surcharge may eliminate this advantage.
.Credit cards can help coordinate receipts for tax purposes.
.Bookkeeping is reduced to one monthly bill as opposed to checks.

Disadvantages
.Some people have been swindled by giving their credit card numbers to dishonest salespeople over the phone.

.It becomes a loan when the credit becomes due and you do not pay for it.
.Adding monthly interest charges means you pay more for the goods and services.
.Consumers often have more than one credit card and each one has a credit limit. When the credit limits for all cards are added up, thetotal can be in the thousands of dollars. Consumers can fall into thehabit of using credit cards to extend their income.
.Credit cards are easier to use than applying for loans even when a loan from a credit union, bank or other financial institution may provide the funds at a lower interest rate.

4 Types of Credit Cards

There are four major types of credit cards: travel and entertainment cards (T & E cards), bank cards, retail store cards, and oil company cards. Applications and interest rates for each type of card may be different. When using a credit card, the consumer agrees to the terms of the credit card company. Read these terms carefully and understand them before using the card.

1.Travel and entertainment cards (T & E) - Consumers must apply for travel and entertainment cards such as American Express, Diners Club, and Carte Blanche and are charged an annual membership fee. Card holders are billed for purchases every 30 to 60 days. They are expected to pay each bill in full. Failure to pay promptly may result in a poor credit report, interest charges, and eventual cancellation of the account.
Some T & E cards offer card holders additional services such as group life and accident-and-health insurance, cash advances and gift catalogues. Free travel insurance is frequently provided when T & E cards are used and they may offer to stretch payments for large bills over a three- to six-month period.

2.Bank cards - The two major bank cards are MasterCard and VISA. Some cards are offered without fees, some are included in a total banking package, and others charge a yearly membership fee.You may use bank cards to charge motel and restaurant bills, merchandise, airline tickets, services, and some cards allow cash advances. Interest on a cash advance starts the day you get the money and continues until you pay back this loan.You are granted a bank card based on your credit record. Your credit record also determines the maximum amount you can charge. You may request to have this limit raised if you establish a good credit history while using the bank card.The interest charges for bank cards range widely, so it’s worth shopping for a low interest rate if you don’t pay your bill in full each month. If you fail to make the monthly required minimum payment, this is reported and shows up on your credit report. You can have your account cancelled.

3.Retail store cards - Retail credit cards are issued by department stores and other companies. If you have a retail store card, you may be notified of special sales before the general public. These cards offer revolving credit at a pre-established credit limit. Finance charges are added to your bill if you do not pay in full each month. Most retail stores also accept bank cards.

4.Oil company cards - Oil companies offer their own credit cards and most accept VISA and MasterCard.

Web Sites To Check for Credit CardsHere are some Web sites to compare credit card fees and interest rates. (Remember that web sites that end in .com are commercial sites and will usually have something to sell.)

www.consumer-action.org

www.icreditsearch.com

www.lendingtree.com

www.cardweb.com

CREDIT CARDS ARE CONVENIENT AND CAN ALSO HELP YOU!

Credit Cards, when used at the right time, can help you. In case of emergency, and if you do not have a medical insurance, you will be accepted much faster in a hospital if you have a valid credit card. Using this card is a very convenient way to pay for your purchases or online purchases. You need not to carry cash always and you get to keep a good record of your expenses. but you must keep the copy of your transaction slip or your signed slip each time you used your credit card to keep records of how much you have already spending or charged to it. Always keep records of your important documents, especially your credit card bills and bank statements. These Documents are only proof that you have made payments.

You should always pay the full amount of the statement every month. This way there will be no interest charged at all. Use it as a simple debit card. Get a credit card if you have a discipline to stay within your budget. Use it only in case of emergencies or if you are only within your strict budget. It is better always that we pay for our expenses in cash. This way, you will be more aware of how much you are already spending, and if you are spending within your means, your budget and your financial plan. BUY ONLY WHEN YOU NEED TO, BUT BUY THE BEST YOU CAN AFFORD.

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