Student Credit Card Offers – Money Doesn’t Grow On Trees

Many undergraduate students have two things when they finish college; their diploma and a lot of debt. The typical college student graduates from school with an average debt of $18,900. This is a 66% increase from five years ago reports Nellie Mae, a leading loan provider.

While the majority of this debt is because of student loans a growing part comes from credit card use that is not restrained.

College students have a bull’s-eye on them, as they are targets for credit card companies that market their services daily to 1,200 college campuses.

The credit card companies lure students with gifts such as T-shirts, bags, and other incentives in exchange for the student filling out their credit card applications. A lot of students are more than willing to do this and then when they receive the credit card many do not use it wisely.

From the time when they begin college to when they graduate students double their debts for credit cards and triple the number of cards they own, according to Nellie Mae. Another startling fact is that by the time college students are seniors 31% have a credit card balance of $3,000 to $7,000.

Contrary to popular belief among college students having a credit card does not give you “free” money. They are basically changing the way you pay. In fact, by using a credit card is much like getting a short term low that is flexible.

Basically when you buy something with a credit card you are borrowing money from the credit card company and then you must pay it back at a later date when you receive the bill.

Some college students get confused between credit cards and debit cards. Debit cards look and feel like credit cards but they work in a totally different way.

When you use a debit card to purchase something the funds are taken directly from your bank to the place where you purchased the item. Debit cards are also used to take out cash, make deposits, or transfer funds with different accounts.

If used correctly credit cards can be a convenient financial tool. Credit cards allow you to buy goods and services all over the world very easily and quickly whether it is in person, over the phone, or over the Internet. Credit cards also can help protect the assets you have.

If the card you carry is lost or someone steals it you can just report it to the credit card company. The company will deactivate your credit card so other people cannot use it and the company will then issue you a new card. This is a more secure way to carry funds, as when you lose cash you have no security, as the cash is gone.

Conversely credit cards can be expensive to have and sometimes they are difficult to control. This is especially the case for young people and students who may not entirely be aware of the serious nature of paying a bill each and every month.

If they are late with their monthly payments the credit card company will tack on a fee, as well as interest charges on what was bought with the card.

Because of this it is imperative for young people and students to fully understand that by using a credit card to buy something that you cannot afford will only raise the amount of debt you have. Credit card abuse can lead to very high amounts of debt and financial crisis.

Using a credit card is a good way to establishing either your good credit or bad credit history. The credit history you have is extremely important since it is one of the main aspects when lenders look at when approving you for any type of loan. Many lenders look at your credit history to make a quick decision if you are a good investment to them. If you have bad credit or no credit you will have a difficult time qualifying for a loan with a low interest rate or a loan period.

There are various factors within your credit report that can have an impact on your credit scores such as history of repayment, credit amount allowed, borrowing patterns, and the highest balance. In order for you to build a good credit history it is important to use your credit card in a responsible manner and to make sure to pay your bills on time.

There are various costs involved when using a credit card. As an example the annual percentage rate (APR) is the cost of credit for not paying the full payment on time. The higher your APR is the more you will have to pay in finance charges if you do not fully pay your balance on time. For example an APR of 17% does not mean that you are paying 17% each and every month.

It is what you would be paying over the course of an entire year. There are fixed rate APR’s that are a bit higher but you will exactly know how much you will be charged per month. A floating or variable rate can also fluctuate as it is described in your Card member Agreement or with a notice that you received in writing from your credit card company.

Credit card companies can also charge a membership fee annually but typically student credit cards so not carry this fee. Individuals with good credit typically qualify for credit cards that have zero annual fees. But there are some rewards credit cards that will usually have an annual fee that ranges from $30-$100.

You should not be scared to use credit cards if you are in college but you must be responsible when using them. Here is some practical advice to follow.

• Only use the credit card if you are positive you can pay off the debt in its entirety
• Try to avoid impulse purchases with the credit card
• Save money on your card for when you need the money for an emergency
• Only carry credit cards that you think you will use
• Pay your bills in a timely manner to minimize finance charges and other charges