Student Credit Cards

Many students obtain a student credit card in order to build up their credit rating and to begin learning about financial responsibility. However, there are dangers with using these credit cards, and many students end up with thousands of dollars worth of debt by the time they leave college. In fact, the average undergraduate ends up leaving college with over $18,000 worth of debt divided between credit cards and student loans. This is a huge number and it can be extremely hard to get out of. So, how does this credit card debt accumulate so quickly for students? The reality is that most students fall into the trap of using their credit cards to pay for everyday, including items that can be considered unnecessary purchases. These items include take out meals, make up, clothes and alcohol, all needless acquisitions. Furthermore, if a student begins missing the minimum payments on the credit cards, then their debt will increase even greater when the companies begin piling on late and finance charges.

Unfortunately, many credit card companies target students and they can often be seen setting up tables within local colleges, in order to generate extra business. Many representatives will convince the student to sign up in order to receive a free product that they may be giving away, like a t-shirt or baseball cap. They are not concerned about the student’s welfare; they just care about making as much money as possible. The worrying thing is, usually students are not just using one credit card; some may have well over four or five in their possession. While it may be wise to carry a credit card to use in emergencies, a student should be aware that many of these cards have a low credit limit and high interest rates. So, it is advisable to only use these credit cards if it is absolutely unavoidable.

If you are a parent of a student that is planning to attend a university, there are a number of ways you can help protect yourself as well as them, against credit card debt. Two of your wisest options include:

�Never Co-Sign on an Account
If your child is going to get a credit card there is not much you can do to stop them if they are over the age of 18 since they are considered an adult. However, you can make sure that you don’t co-sign an account with them. If you do, any mistakes which they make will not only show up on their credit history, but it will also affect yours.

�Buy A Prepaid Card
A prepaid card is a great option for students as you can buy it and put a certain amount of money on it each month. The student can not go over the limit or get hit with late charges with these types of cards. This allows you the peace of mind of knowing that they will never become riddled with debt. This does not prevent them from signing up for a credit card on their own, but if you remind them of the importance of financial responsibility, it may persuade them to pass up a student credit card.

The main idea is that as long as your student is responsible, a credit card should not cause any major problems. A graduate who has used their credit cards sensibly will have a great credit rating and will find that it may be easier to secure a mortgage or purchase a car. Students and parents need to be aware of the dangers of getting carried away with these credit cards and because of the high interest rates decide if it worth applying for student cards at all.

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