Wednesday, May 30, 2012

Tips to Apply for a Student Credit Card

College students are encouraged to apply for a student credit card when they feel they are already eligible. This will allow them to establish their credit promptly. However, because of the reform enacted on the Credit CARD Act of 2009, those who are under 21 years old are not qualified. They are only allowed to get a card if they either submit regular income proof or if they have someone with income as a co-signer. If you are a college student and have decided that you want to start having credit, here are a few things that you need to know:

Before You Sign

All companies present their clients with an agreement. It is your job to comprehend everything that is written in the agreement, including the interest rates and the fees. Some card companies will offer you with great deals, but for a price or with confusing programs. Make sure that all is clearly disclosed to you. This builds trust between you and your creditor. If there are items that you do not understand, do not hesitate to ask.

How Many Credit Cards Should You Have?

Since you are just starting to establish your credit history, it is a good idea to begin with just one credit card. It is understandable that you will be tempted to apply for a few more cards. However, it is better to use a single card at this point. Aside from the fact that each card application can hurt your score, having more of these plastics may lead you to debt in just a short period of time.

Using the Student Card

Paying with plastics can be fun, especially for college students. Having such a tool is often viewed as a symbol of financial prestige. Often, students do not realize that credit cards should not be used for purchases that they cannot afford. This is actually the quickest path towards debt that you will find difficult to repay. It is unwise to carry a balance since this will cause your grace period to end. The next thing you may know is that you are already knee-deep in debt without money to pay for it.

Do You Know That Your Account Has a Limit?

All credit cards have a credit limit. Students are often presented with low limit at first. This will gradually increase as you construct your history over time. If you go over your limit, you may be required to pay a fee as punishment. Creditors earn more interest as you carry a balances. As you struggle to pay for your debt, they enjoy taking more money from you.

Should You Pay an Annual Fee to Gain More Benefits?

One of the first things that you should look at before you sign up for a credit card is the annual fee. Since you are just a student, it is strongly recommended that you choose a card without an annual fee. When you use your card, the creditor already earns money as they charge a small fee to the merchant. There are other fees that you may have to pay but an annual fee should not be one of them.

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