Thinking about Student Credit Cards and Student Loans

The Importance of Using Student Credit Cards Wisely

Executive Summary by: Morgan Hamilton

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. 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.

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.

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 Pick the Best Student Credit Card

Executive Summary by: Beth Derkowitz

As your son or daughter heads off to college, there are a lot of things that they will be learning about-and managing their finances is one lesson that needs to be taught before they pack their bags.

How students get into trouble

Unfortunately, credit card companies realize that college students aren’t all that knowledgeable about credit cards and capitalize on that, causing thousands of dollars in debt outside of school loans. But there are ways to teach your child how to handle a credit card.

Credit cards aren’t a bad thing

While it might seem like a simple solution to forbid credit cards entirely, this can also be an opportunity to teach your child how to handle their money. Start by applying for cards with both of your names on it and with a low limit.

The best card will do this

The best student credit card will have a low limit that your child will need to watch in order to stay in a good credit standing. The best student credit card will also allow the student to gain rewards for their purchase, perhaps cash back or gas money for trips back home. even though they won’t be spending a lot on the card, it can help to see how credit cards can be used responsibly

Are Student Loans Better Than Credit Cards?

Executive Summary by: Vanessa McHooley

Way too many college students these days get into big trouble with credit cards. It’s unfortunate that students too inexperienced to know better receive enticing credit card offers in the mail. Usually when a credit card offer looms over a student, it’s like dangling a carrot in front of a rabbit. The student grabs the credit card offer without thinking ahead.

Student Loans versus Credit Cards

Like student loans, credit card debt must be paid back. Student loans usually are taken out with fixed interest rates, depending on the type of loan and a students’ credit rating, amount of loan, repayment terms, etc.

Some students who haven’t taken out enough student loans to cover their college expenses resort to credit cards to pay for necessities, books and even rent!

Never-ending Cycle of Debt

There are students who accept more than one credit card offer. With the high interest rates and finance charges attached to these credit card offers, students easily can rake up more than they bargain for. When students pay off credit cards by only paying minimum monthly payments, they are making their financial situation worse. Finance charges accrue month after month. It could take almost a lifetime to pay off the credit card bills.