Going to college is a major milestone in the life of a student.
Life in the college is the last leg of freedom before he/she takes up
the responsibility of a job and family obligations. As you enter the
college campus there are many credit card companies that are going to
bombard you with their offers. It is up to the students to decide which
company to choose and reject. Here is a list of pros and cons of student
credit card that would guide you in the usage of your card.
Benefits of Student Credit Cards
Responsibility – Though these card gives you financial independence, it is also teaches responsibility in spending and paying bills each month on time.
Useful during Emergencies – Credit cards are useful at the time of emergencies. However, ensure that you use them only when you are short of cash and there is a dire need to pick up something or pay the medical bills.
Helps in building credit – students are young adults. Using credit cards will help them to establish credit history and record. If you have good credit score by the time you complete your college, it will give you a sound footing in with your employer and also you can buy your vehicle or apply for a bank loan.
Cash Back rewards- Most of the students credit card offer rewards for each purchase you make either through cash back or points. You can use this to buy your stationary, college text books or air tickets.
Disadvantages of Student Credit Cards
A survey conducted by Sallie Mae in 2009 revealed that 85 percent of students had at least one card while, the average was 4.5 cards per student. If a student has three cards with the credit limit of $5000, it means he will have the potential to tally up to $15,000 in unsecured debt.
Misuse of the cards – There are times when students purchase those things that are not essential with their card. This will add to their credit card debt. Sallie Mae study revealed that many students are living beyond their means by using their student’s credit-card.
Students loans in addition to Credit Cards – One of the major disadvantages of the student credit cards is that they would have to pay a huge credit card debt at the beginning of their career in addition to their student loan debt. This can saddle the students in the beginning of the career.
However, as per the credit card reform legislation that became effective in 2010, the students under 21 years of age are not eligible for unsecured credit card. If they want a credit card, it has to be signed by an adult family member, either of the parents or the student has to prove he is financially stable enough to pay off balances every month. Else the only alternative is to use secured or prepaid credit cards.
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Benefits of Student Credit Cards
Responsibility – Though these card gives you financial independence, it is also teaches responsibility in spending and paying bills each month on time.
Useful during Emergencies – Credit cards are useful at the time of emergencies. However, ensure that you use them only when you are short of cash and there is a dire need to pick up something or pay the medical bills.
Helps in building credit – students are young adults. Using credit cards will help them to establish credit history and record. If you have good credit score by the time you complete your college, it will give you a sound footing in with your employer and also you can buy your vehicle or apply for a bank loan.
Cash Back rewards- Most of the students credit card offer rewards for each purchase you make either through cash back or points. You can use this to buy your stationary, college text books or air tickets.
Disadvantages of Student Credit Cards
A survey conducted by Sallie Mae in 2009 revealed that 85 percent of students had at least one card while, the average was 4.5 cards per student. If a student has three cards with the credit limit of $5000, it means he will have the potential to tally up to $15,000 in unsecured debt.
Misuse of the cards – There are times when students purchase those things that are not essential with their card. This will add to their credit card debt. Sallie Mae study revealed that many students are living beyond their means by using their student’s credit-card.
Students loans in addition to Credit Cards – One of the major disadvantages of the student credit cards is that they would have to pay a huge credit card debt at the beginning of their career in addition to their student loan debt. This can saddle the students in the beginning of the career.
However, as per the credit card reform legislation that became effective in 2010, the students under 21 years of age are not eligible for unsecured credit card. If they want a credit card, it has to be signed by an adult family member, either of the parents or the student has to prove he is financially stable enough to pay off balances every month. Else the only alternative is to use secured or prepaid credit cards.
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