Credit Cards for College Students
With the high cost of living these days, everyone is looking for ways to make the most of their resources. Many people, including college students, regularly use credit cards to help bridge the gap when they need to make an out-of-the-ordinary purchase. Although credit cards for college students can be a powerful tool to have, that power has to come with responsibility. Here we’ll try to give you some of the info you need to start, and keep, your credit on the right path.
A student credit card can be a powerful friend to have. It can help you complete online purchases. It’s there when unexpected emergencies arise, such as a vehicle breakdown, or a medical emergency. Having a student credit card can even help you to build further credit, because using it responsibly will help you to build a good credit history.
Many different companies offer some variation of credit cards for college students. Although you could apply for any credit card, student credit cards are especially helpful to students. How? Because they offer special incentives for students that other types of credit cards do not. For instance, some credit cards for college students feature a “point system,” where students are rewarded for keeping a good grade point average at college. Some will offer these reward points, or even a small reduction in your interest rate, for paying your bill on time, and staying under your credit limit. In short, these credit cards for college students are rewarding you for doing well in school, and for being responsible with your finances. So it’s definitely to your advantage to seek a credit card that’s tailored for students.
Of course, as mentioned above, having a credit card also involves taking a little responsibility for your spending and use of credit. It’s easy to get into the mindset that, because you have a credit card with a limit of $3,000, it’s okay to go out and use it to buy everything under the sun, before the week is out. That could be a very costly mistake, which could have a negative effect on your life, for decades to come.
Why? You have to bear in mind that these credit card companies are out to make a profit. And that means, of course, that they’re going to charge you interest. And $70 or $80 a month for the minimum payment on that $3000 credit card balance seems cheap enough; with a part time job, you can afford it, right?
Well, even if you can make those minimum payments every month, you have to realize what just making the minimum payment will cost you over time. Here is where things get staggering, and it’s where not understanding things will destroy you financially.
Take that $3000 credit card balance. Now, if you choose to just make that minimum payment every month, believe it or not, you’ll likely be making payments on the balance for the next decade or so. Really. And again, believe it or not, during that time, you’ll likely pay back 2 or 3 times the amount you borrowed, by the time you pay interest all those years. So that $3000 television set you bought with a credit card could end up costing you more like $10,000 by the time you pay off the credit card, if you only make the minimum required monthly payments. Wow. That’s powerful. And scary.
But if you have a student credit card, things don’t necessarily have to be this way. As noted above, these credit cards can be a useful tool, a good friend to have, if you use them wisely.
For example, try not to use the card for everyday purchases. Even though you may think that $3 here and $5 there doesn’t amount to much, over time, it will. Use cash whenever possible, and save that credit card for online 
purchases when necessary. Or, use it for out-of-the-ordinary purchases, such as for a vehicle repair or other purchases that are unusual, but necessary. If you don’t want to carry a lot of cash around, consider opening a checking account with a local bank, and using a debit card through that checking account, instead of running up a balance on your credit card.
Always go out of your way to pay off your credit card balance in full, every month. Even if it seems like a little stretch to do so, it will be much easier than digging out from under a mountain of debt later. If you can’t pay off the full amount every month, at least try to pay a little above the minimum required payment. The extra few dollars you pay above minimum will have a huge effect on paying down your credit card balance.
And if you’re running a balance on your card that you’re not paying off every month, you should at least try to stay under half of your total available credit line. Doing this will be like a reality check for you… in other words, if you can’t pay off the first half, you know you shouldn’t get any deeper into debt. In addition, keeping your balance low could keep you from getting into trouble with your credit score – running a high credit card balance that’s near your limit makes you look like a higher credit risk, even if you’re regularly making payments.
When you’re shopping for student credit cards, be sure to look at all the various types of interest rates you may be required to pay. For example, many credit cards for college students will feature some type of “introductory interest rate” that goes away after a few months or so. That introductory rate may sound great, but what if the normal interest rate is 20 percent? If you end up missing a payment deadline by a few days, the credit card company may move you to a “default” interest rate, that can be much higher than your normal interest rate. What is the “default” rate on the card you’re looking into? Don’t think, “I won’t be late on my payments.” You should try very hard not to be late, but you want a credit card that won’t destroy you with an incredibly high interest rate if you are.
Another frame of mind that you may be tempted into following is, “I may be running up debt now, but when I get out of school, I'll use my good salary to pay it off.” Hopefully you are right about the “good salary,” but what is easy to forget is all the other expenses you'll face once you're on your own, such as utilities, car notes, house notes, insurance, clothing, and more. And what if your first job out of college doesn't pay that well? What if you're forced to work for less money at first, in a job where your degree won't benefit your salary?
All these things can and do happen. And putting the burden of a large amount of credit card debt on top of all this will only make your life miserable. Instead, be a little more kind to the “You of the Future,” by working your credit card balance down now. To do this, you may have to live a little more humbly than you did at home. Learning to live frugally while in college, you'll find that you can still have a great time, without breaking the bank. It's not the end of the world if you have to 'rough it' just a little for a few years... you can do without some of the amenities you had at home for a while. And you can bet your parents didn't have all those cool extras when they were just starting out, either.
Credit cards for college students can be a great help from time to time when the ends don’t meet. They can be a good start towards establishing good credit. By using your head and living within your means, you can leverage these types of credit cards when you need them to have buying freedom you would never have otherwise.
Next: Student Education Loan