Change of Rules
Deception on the part of some credit card companies and excessive debt on the part of some consumers led to the passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act), aimed at protecting consumers. Part of the Act directly relates to student credit cards. While incoming college freshmen once were able to sign up for cards in nearly every corner of campus, new restrictions have been put in place to help prevent students from stepping into financial traps.
One such regulation is that credit card companies are forbidden to issue credit cards to anyone under the age of 21 unless they have an adult co-signer or they can prove they have the means to pay the bills. But when the time finally comes to get your first card, following a few simple guidelines can help you establish a strong credit history and responsible financial habits that will benefit you greatly when it's time to secure a car loan, apartment or even a job. Your ability - or inability - to handle credit responsibly will stay on your credit report for many years to come.
1. Do your homework. Credit cards come in all shapes and sizes with varying rates and fees. Take the time to examine your options.
Take advantage of the information available on the Internet as well as the offers you receive in the mail. By comparing interest rates and other pertinent credit card information, you can choose the best card for you.
Look for a card with no application fee and no annual fee.
Read the fine print on card offers and beware of introductory rates. You don't want to be in for a shock if your interest rate unexpectedly jumps from 0% to 20.99%.
Cash advances often come with big fees. Be aware of any associated charges and avoid them if possible.
Make sure the credit card company reports to the three nationwide credit reporting agencies - Equifax, Experian and TransUnion - to ensure you reap the benefits of your responsible credit card habits.
2. Purchase only what you can pay off at the end of your billing cycle.Use your credit card to make smaller, occasional purchases and be mindful of your balance...those purchases can add up quickly! Paying your balance in full each month will save you a lot of money in finance charges and will help to establish your creditworthiness.
3. Pay your bill on time.Between the tests, projects and social obligations that come with school, it can be easy to forget about your credit card due date. Make sure you know when your bill is due. If your payment is late you'll be faced with hefty late charges on top of finance charges. You can make payments with a check through snail mail, but most companies offer online payment options and many will let you set up automatic payments to ensure timely delivery.
4. Save your credit card for emergencies. You never know what lies ahead and you don't want countless pepperoni pizza charges to eat up the available credit you'll need for a tow truck on a cold winter night.
5. Apply for one card at a time. Opening multiple lines of credit in a short period of time can have a negative impact on your credit report. Take time to learn how to handle one card first.
Getting a student credit card while still in college can be a big temptation that can turn against you if you are not using the card responsibly. It wouldn't hurt to take some personal finance courses - even if they are not held on campus - if you do not feel you are not experienced enough in money management topics, which is the case with many young adults who are not introduced to important money topics throughout their high school or college learning.
The more educated you are about the ways of the credit industry and basic money management concepts, the more likely you will be to establish an excellent credit profile that will follow you long into adulthood. What you do at age 21 financially can still matter at age 31, 41, and 81. Your first student credit card will open many more doors but will always be an essential part of your overall credit history and can make or break you financially, especially after graduating college and entering the 'real' world.
Deception on the part of some credit card companies and excessive debt on the part of some consumers led to the passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act), aimed at protecting consumers. Part of the Act directly relates to student credit cards. While incoming college freshmen once were able to sign up for cards in nearly every corner of campus, new restrictions have been put in place to help prevent students from stepping into financial traps.
One such regulation is that credit card companies are forbidden to issue credit cards to anyone under the age of 21 unless they have an adult co-signer or they can prove they have the means to pay the bills. But when the time finally comes to get your first card, following a few simple guidelines can help you establish a strong credit history and responsible financial habits that will benefit you greatly when it's time to secure a car loan, apartment or even a job. Your ability - or inability - to handle credit responsibly will stay on your credit report for many years to come.
1. Do your homework. Credit cards come in all shapes and sizes with varying rates and fees. Take the time to examine your options.
Take advantage of the information available on the Internet as well as the offers you receive in the mail. By comparing interest rates and other pertinent credit card information, you can choose the best card for you.
Look for a card with no application fee and no annual fee.
Read the fine print on card offers and beware of introductory rates. You don't want to be in for a shock if your interest rate unexpectedly jumps from 0% to 20.99%.
Cash advances often come with big fees. Be aware of any associated charges and avoid them if possible.
Make sure the credit card company reports to the three nationwide credit reporting agencies - Equifax, Experian and TransUnion - to ensure you reap the benefits of your responsible credit card habits.
2. Purchase only what you can pay off at the end of your billing cycle.Use your credit card to make smaller, occasional purchases and be mindful of your balance...those purchases can add up quickly! Paying your balance in full each month will save you a lot of money in finance charges and will help to establish your creditworthiness.
3. Pay your bill on time.Between the tests, projects and social obligations that come with school, it can be easy to forget about your credit card due date. Make sure you know when your bill is due. If your payment is late you'll be faced with hefty late charges on top of finance charges. You can make payments with a check through snail mail, but most companies offer online payment options and many will let you set up automatic payments to ensure timely delivery.
4. Save your credit card for emergencies. You never know what lies ahead and you don't want countless pepperoni pizza charges to eat up the available credit you'll need for a tow truck on a cold winter night.
5. Apply for one card at a time. Opening multiple lines of credit in a short period of time can have a negative impact on your credit report. Take time to learn how to handle one card first.
Getting a student credit card while still in college can be a big temptation that can turn against you if you are not using the card responsibly. It wouldn't hurt to take some personal finance courses - even if they are not held on campus - if you do not feel you are not experienced enough in money management topics, which is the case with many young adults who are not introduced to important money topics throughout their high school or college learning.
The more educated you are about the ways of the credit industry and basic money management concepts, the more likely you will be to establish an excellent credit profile that will follow you long into adulthood. What you do at age 21 financially can still matter at age 31, 41, and 81. Your first student credit card will open many more doors but will always be an essential part of your overall credit history and can make or break you financially, especially after graduating college and entering the 'real' world.
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