Student Credit Cards: Usage and Precautions
These cards enable students to pay for academic expenses like assignments, projects, internships, online courses, language-learning classes, etc. Using this card, a student can create a good credit history, which can be utilized in future, for larger purchases like a car or a home. However, students should be aware of the fact that the interest rates are high, and if they fail to pay the penalties on time, the results could be damaging. Also, the students may accrue a debt, which if they are not able to repay, can damage their credit score.
A better option is to have a debit card. The expenses are subtracted from the existing funds, and when the funds get exhausted, purchases have to be ceased. The student must thoroughly know the pros and cons of using a credit card, before they start using one.
Role of Parents
Parents should show their children, the correct way of comparing and then selecting the right card. They are also required to co-sign the application form with them. It is advised that parents should keep a watch on the card-usage pattern of the student. Proper and timely guidance is what is required.
Important Tips and Precautions
Certain Student Credit Cards have low credit limit, and this compels the student to spend money carefully. Some of them have no annual fee, 0% APR or a rewards program. Sometimes, the reward may offer something for free, as a gasoline card for free gas.
The facts mentioned below have been garnered in November 2007 and would help you in selecting the right card. The Citi Dividend Platinum Select Card for College Students provides a 5% cash return on eligible purchases at gas stations, drugstores, supermarkets and convenience stores. Additionally, there is 1% cash return on all purchases whenever the MasterCard Student Credit Card is used. On all individual balance transfer transactions of minimum $1500, $5 cash is received back. On all cash advances taken at the standard cash advance rate, 1% cash is received back. This card has the following advantages:
- No minimum income required
- No co-signer needed
- Credit education tools
- The lost wallet service
- Citi Photocard option
- Citi Identity Theft solutions
The Citi mtvU Platinum Select Visa Card is issued by Citibank specifically for college students. This has a unique reward program, that awards points to students for two reasons; first, if the student gets good grades, second; for the wise use of the card. For general purchases one point is given, and five points for expenses at bookstores, record stores, restaurants, video rentals, and movie theaters are added to the card. If payments are done on time and do not exceed the credit limit, 25 points are added. From 250 to 2000 points are given, and these also depend on the student’s GPA.
The maximum number of points that can be earned are 75,000 and these remain for a maximum of five years. In this five year span, these points can be redeemed for multiple benefits. An annual fee is not charged. However, the interest rate is more than average.
The Capital One Platinum Card for students has a purchase APR of 0% up to February 2008, and then it will vary. The credit limit is $300-$3000. There is 24-hour roadside assistance along with towing, lock-out service and flat repair. Also, there exists collision, damage and loss insurance on rental cars. There is an emergency card replacement or cash advance in case the card is lost or stolen. Online account service is available along with 24/7 customer support.
Precaution is Better than Debt
I would like to mention a point here that, when you are in college, you may be lured into applying for more than one card because of the one-time freebies they offer. But be aware of the fact that if you have too many student Credit Cards at your disposal, you may buildup a huge debt. And if the debt is not cleared on time, it may screw your credit score in the long run. Also, it is advised that to be on the safer side, you should use less than 25 percent of the available credit limit.
Paying for University
There are several universities that facilitate payment by using a student Student Credit Card. The Student Fee payment form has to be filled. This includes the student’s name, name on the card, phone number, area code, student number, amount to be paid, whether Visa or Mastercard, card number, expiry date and the signature. Then, this completed form has to be faxed to the university.
Hopefully, with the above-given information, parents will select the correct card for the student, and the student will use it wisely. All the best!