Once a student graduates from high school and heads off to college they will be tempted with student credit cards. Student credit cards are aimed at college students. They are easier to get and are great for helping a student establish credit, however, they can also get a student into credit problems.
Before ever getting a student credit card a student needs to understand how credit cards work and how to avoid getting into debt. Credit cards offer a loan on purchases. A person can buy things with their credit card even if they do not have the money to pay for it. However, eventually the balance charged must be paid back. Most credit card companies allow a person 30 days to pay back the amount charged.
If the person fails to pay off the full amount within that time frame the credit card company charges them interest. Interest is charged at a percentage of the overdue balance. So if a student has a $100 balance and the credit card company charges 20% interest the student now owes $120.
Over time the interest keeps adding up and eventually if the student is only paying the minimum amount due they are in reality only paying off the interest and their credit card balance is never going to be paid off. This is why it is important for a student to understand how credit works before ever signing up with a student credit card.
Once a student decides to get a student credit card they need to look at a few things before making their choice. They need to check out the annual fee. An annual fee is a lump sum the credit card company charges to their credit card once a year. Some cards do not have an annual fee. additionally they need to look at the interest rate and other fees. Most accounts charge fees for going over the issued credit limit.
Sometimes interest charges can send a card over the limit. This not only causes extra fees, but also means the student can no longer use the credit card. Paying attention to the different terms and conditions of the card will help the student to choose the card that is best for them.
Student credit cards are a great way to establish credit. A student should be careful, though to make sure they are responsible when using their credit card, so they can get the benefits of it, not the problems.
Sunday, October 21, 2007
The Importance of Using Student Credit Cards Wisely
Are you familiar with student credit cards? These credit cards are meant for college students, and are easier to get than regular credit cards. They can help a student establish credit, but they can also bring credit problems to careless students.
Student credit cards can be a source of temptation for college students. Young adults can be easily tempted to buy unnecessary things with their credit card, even if they do not have the money to pay for it. Eventually the balance they charged for their shopping sprees must be paid back.
If a college student is unable to pay the full amount within a certain period of time, interest will be charged. Credit card companies charge interest at a percentage of the over due balance. For instance, if a student has a $100 balance and the credit card company charges a 15% interest rate, the student now owes $115 to the credit card company.
The interest keeps adding up and eventually the student may end up paying only the interest, and their credit card balance is never going to be paid off. That is why the parents of college students should first explain the proper use of student credit cards to their children, before they allow them to get credit cards.
There are also a few things that should be examined before students choose a particular credit card. It is important to check the annual fee of student credit cards. An annual fee is a lump sum that some credit card companies charge to their credit card every year.
It would also be wise to look at the interest rate and other fees of student credit cards. There are cases where the interest charges can send a credit card over the limit. This will cause extra fees, and the student will be unable to use the credit card. Students should pay attention to the different terms and conditions of student credit cards, so that they can determine the particular credit card that is best for them.
Student credit cards can be a source of temptation for college students. Young adults can be easily tempted to buy unnecessary things with their credit card, even if they do not have the money to pay for it. Eventually the balance they charged for their shopping sprees must be paid back.
If a college student is unable to pay the full amount within a certain period of time, interest will be charged. Credit card companies charge interest at a percentage of the over due balance. For instance, if a student has a $100 balance and the credit card company charges a 15% interest rate, the student now owes $115 to the credit card company.
The interest keeps adding up and eventually the student may end up paying only the interest, and their credit card balance is never going to be paid off. That is why the parents of college students should first explain the proper use of student credit cards to their children, before they allow them to get credit cards.
There are also a few things that should be examined before students choose a particular credit card. It is important to check the annual fee of student credit cards. An annual fee is a lump sum that some credit card companies charge to their credit card every year.
It would also be wise to look at the interest rate and other fees of student credit cards. There are cases where the interest charges can send a credit card over the limit. This will cause extra fees, and the student will be unable to use the credit card. Students should pay attention to the different terms and conditions of student credit cards, so that they can determine the particular credit card that is best for them.
How to Beat the Banks at the Credit Card Game
This financial tip is an answer to a letter I recently received from Debbie. She asks: “We’ve been battling credit cards for most of our married life. We’re finally getting on top of the situation. We’ve paid off almost all of our cards with one left to go. It feels good! It makes me extremely angry to get two and three new offers of credit cards almost every day. I take great joy in tearing all of them up and throwing them away. The minimum payments have gone up. Interest rates are astronomical! Is there anyone who goes to bat for the consumer on credit cards or are the big banks just leading us to the slaughter? It appears that the banks can do about anything they want. Thanks!”
First of all, congratulations on your efforts to get out of debt. As I’ve mentioned in the past, this has to be a major priority for all Christians. We are to be slaves to Christ, not to lenders.
Unfortunately, the banks have a lot of power to influence Congress, so they are able to do just about anything they want. Which means anyone who has credit card debt knows what Scripture is talking about when it says, “the borrower is servant to the lender.”
You’re doing the very best thing you can do to control the banks – pay off the cards. And then stay out of debt. If you can’t control your spending with credit cards, cut them up and stay away. Credit cards are a great tool if you know how to control them. Unfortunately, most people don’t. Researchers say that the average person spends about 30% more when they use a credit card compared to using cash only. That’s why radio talk-show host Dave Ramsey tells all his listeners to cut up their cards.
I think that’s the best course of action for most people. Remember, the banks make money with credit cards three ways: interest charges, late payment and other user fees, and through merchant fees (fees charged to the companies that accept credit cards). The latter will often result in higher prices you pay for the things you buy. The first two, you have more control over.
If you decide to use credit cards, you must pay them off every month and use them only for items you would buy with cash. That means you have to stay within your budget. If you can do that, then credit cards are a good tool to use. But if you can’t, then cut them up.
First of all, congratulations on your efforts to get out of debt. As I’ve mentioned in the past, this has to be a major priority for all Christians. We are to be slaves to Christ, not to lenders.
Unfortunately, the banks have a lot of power to influence Congress, so they are able to do just about anything they want. Which means anyone who has credit card debt knows what Scripture is talking about when it says, “the borrower is servant to the lender.”
You’re doing the very best thing you can do to control the banks – pay off the cards. And then stay out of debt. If you can’t control your spending with credit cards, cut them up and stay away. Credit cards are a great tool if you know how to control them. Unfortunately, most people don’t. Researchers say that the average person spends about 30% more when they use a credit card compared to using cash only. That’s why radio talk-show host Dave Ramsey tells all his listeners to cut up their cards.
I think that’s the best course of action for most people. Remember, the banks make money with credit cards three ways: interest charges, late payment and other user fees, and through merchant fees (fees charged to the companies that accept credit cards). The latter will often result in higher prices you pay for the things you buy. The first two, you have more control over.
If you decide to use credit cards, you must pay them off every month and use them only for items you would buy with cash. That means you have to stay within your budget. If you can do that, then credit cards are a good tool to use. But if you can’t, then cut them up.
Subscribe to:
Posts (Atom)
