Credit Cards for Students, is It a Good Idea?
A Credit Article Contributed by Augusta Wilson
Just What is a Student Credit Card?
A student credit card is essentially a credit card, which is designed for either high-school or college students. Credit card offers geared towards college students often promise interest-free grace periods, low interest rates, and special offers from top retailers. High-school students can opt for a pre-paid plan, which the student can then 'reload' with money, for more useable 'credit.' It is important to realize that having a credit card doesn't increase your cash flow, nor give you 'free money.' A credit card simply changes the way that you pay for goods and services.
What are the Benefits of Having a Student Credit Card?
A student card can be a very useful training tool for learning how to properly manage credit. It can enable you to learn about the credit rating process and how to learn good credit management, which is an important part of gaining responsibility, as you strike out on your own. Credit is indeed a very powerful tool; it can help you in times of need, and proper management will help you with future purchases, like buying your dream car, or even determine which home you can afford to buy when you decided to settle down.
The Drawbacks of Student Credit Cards
While getting a credit card is indeed easy, paying them back sometimes isn't. Remember, it is so easy to get into trouble with credit cards; credit card companies are eager to lend you money, because, quite frankly, these companies make a lot of money from the interest that their clients' accounts generate.
There will be times when it seems easier to pay by card rather than with cash, like when you go out to lunch with your friends and the ATM is at the other side of the mall, and you're too tired to move, from all the morning's shopping. Why should you walk all the way down to the first floor, when you could just put the meal on plastic? Because you must eventually pay off your balance. A credit card is a loan, which you must pay back- nothing more.
Before you apply for a student card, you should ask yourself some pretty serious questions like: Can I actually pay back a credit card loan? What will the interest be like, and how will it affect my minimum payments? Do I have a back-up plan in case I can't make the minimum payment each month? Credit cards are key to developing a good credit history and rating, but they must be treated with respect.
If you spend responsibly, you can develop and maintain a good credit. Remember, having a poor credit rating can prevent you from getting the things in life that we all plan for, like cars or leasing an apartment. Once you get your card, remember to keep the account current by paying off the balance each month, or at least pay the minimum amount due. This will help to insure that you have a healthy financial future.
