University Students and Credit Cards
Most students attending university are looking forward securing a bright financial future for themselves, but misuse of credit cards can put a damper on that future and even affect the jobs available to them on graduation. Employers check credit scores and while they will overlook student loans, they won’t overlook bad scores caused by credit care abuse. Starting a new phase of life with a good credit history is vital to a student’s future.
The best credit cards for students are probably bank debit cards, prepaid credit cards and secured credit cards. The credit limit is tied to the amount of cash deposited in an account, so a student can’t spend more money than he actually has available. Secured credit cards have limits tied to a savings or checking account, but secured cards don’t take money from the account as long as repayments are made on time.
Secured credit cards have the advantage of allowing the card holder to accumulate interest on the money deposited in the account. Debit and prepaid cards are like checks and the money spent is automatically removed from the account. Secured credit cards also help the student build a credit history showing timely repayments on the credit card.
If a student opts for an unsecured credit card, he should select a low credit limit to avoid accumulating too much debt. A limit of $300 to $500 can usually be paid off quickly and without too much pain. It is best to choose a card with a low interest rate and a low or zero annual fee. Make sure that the interest rate isn’t an introductory offer which will revert to a higher rate in six months or a year. Rewards cards usually have higher interest rates and fees and aren’t practical for financially strapped students.
Parents can opt to add a student to an existing credit card account as an additional card holder. Before adding a child to an existing account, parents should set ground rules for how the credit card is to be used and how much the student is allowed to charge on the card each month. Penalties for misuse of the credit account should be established in advance since adding a child to a credit account has consequences for the parent as well as the child.
Learning to use credit wisely is an important part of growing up and taking responsibility for one’s choices. Parents and university students should work together to insure the brightest possible financial future after graduation.
Trung says:
May 15th, 2011 at 4:52 pm
Parent can be noticed by receiving message when student tries to use money over a specific amount, they may be able to allow or not allow their children to spend that much with a single call.
rainirn says:
May 29th, 2011 at 1:09 am
Students should be given credit cards based on their financial stability of repayments. For example, a student working part time. The bank has to analyze the savings history of the student. Students also should opt credit cards for convenience as in nowadays people can pay for stuffs online by using their credit cards. This should not be misused.
Paul W says:
June 5th, 2011 at 10:02 am
Giving students a credit card with a low limit is a good way for them to learn about using credit without being able to cause too much damage. This will be a good learning experience before they enter the real world and possibly get a card with a greater limit.
mdahamed says:
June 5th, 2011 at 5:03 pm
With a low limit of credit card can be given to the students or based of their financial constancy of repayments. Giving the credit card limitiaon they can know how to use the credit card and not too much damages of credit. These wil be the best way to learn before they do something in real life. without loosing too much credit.
Shan says:
June 19th, 2011 at 7:07 pm
Debit cards loaded with a persons own money are the best idea for university students, as real credit cards with thousand plus dollar limits contribute to getting many students in debt, because they think they think they have all of that money to spend and tend to forget that they will have to pay it all back soon enough.