Student Credit Cards - A Liberating Yet Sobering Experience

This is a guest post from Janet Hutchins of Credit Cards Canada.  You can follow her on Twitter at @CreditCardsCA.

_________________________________________________________________________________

It's a once-in-a-lifetime experience: spreading your wings and leaving the nest.  Freedom, sweet freedom.  And responsibilities, bummer responsibilities. As a student, you need to manage of most of your own needs, from your laundry to cooking to cleaning to balancing the books. And speaking of finances, you need to start thinking about your credit history ("My what?!?!"), and your financial reputation. One way you can get on the a smart financial path is to get a good student credit card.

Evaluating a Student Credit Card

Few students have established credit, and this makes it difficult to obtain a standard credit card (yes, that's why there are cards called "student credit cards"). This can make it quite difficult to get a card with a good interest rate. (A student in the U.S. who is under 21, who can’t prove that he or she has an income, will need a co-signer.) But there are cards available, so don't fret.  There are even some credit cards that give students access to rewards programs and low annual fees.

When searching for a student credit card, expect to pay a slightly higher interest rate (no credit history, remember?). Luckily, many come without annual fees, and you will find that many also come with rewards programs that can be reasonably generous. Big caveat: when looking at rewards programs, make sure that you consider flexible rewards cards with a variety of options that you are likely to use. Points can usually be redeemed for entertainment and even cash, so make sure the rewards are actually useful to you..

Consider the introductory interest rate, and how long it will last. You should also be careful of picking a college student credit card based on the special gift. While the gift is a nice bonus, make sure that you will benefit from the card programs before you apply for a credit card.

Wise Use of Your Student Credit Card

When your credit card arrives, you need to be careful how you use it. Yes, it is very easy to go astray and rack up Michael-Jackson-sized debts, even if a private zoo is not what you put on the plastic.

Follow the best practices to avoid the debt trap that many students wind up in. Save up money for large purchases, and only charge what you already have money for. When you follow this rule, you will be able to pay off your credit card balance each month, avoiding interest charges that represent a drain on your income.

Credit cards open doors to....to...well, just about anything.  But when it comes to balancing the books, they only buy you time.  And if you buy too much time, that time becomes expensive.  Instead of building a reputation for bad credit that will haunt you for years to come, make sure your new credit card builds your financial credibility. 

Share |