Things to Know About Student Credit Cards

Things to Know About Student Credit Cards
By Paul D Johnson

College students beware of student credit cards. When you show up at college on orientation day, you'll find yourself bombarded by people trying to sell you a credit card designed for college kids. The card is different from other other cards in that they are expecting to be a person's first credit card. They are aware that you probably don't have any credit history. The card is designed for this and the risk factor is taken into consideration when determining the credit limit you would qualify for and the interest rate.

Now, the idea behind these credit cards is not a bad one. Their sales pitch is about helping kids start establishing credit as they are headed out into the world on their own. And it is a good thing to get started establishing good credit history so that when you need credit, getting your first apartment, purchasing a car, etc, you will already have some payment history built up.

However, the issue is many times college students are getting these cards, but they are not too familiar with the ins and outs of having a credit card. They may not be good at budgeting and may just be excited to have a card in their name. Since, they are not warned about improper use of a credit card, many kids go wild with it right away and charge it up. They then find they are only able to make the minimum payments, because they are students without jobs, and the balance never comes down. Now, instead of helping them build credit, they've only started off on the wrong foot by hurting it. Since they only have one card, this is going to be the only basis for payment history. Sure, they may be making timely payments, which is good, but they are also being dinged for having the card maxed out. Not only is their credit getting poorer, but now they are already starting life out with debt they can't repay.