Credit Cards For Students
All About Credit Cards For Students
Since there is a credit card for just about every possible use, it is only natural that credit cards for students or college credit cards - as they are also known should be high on the agenda of credit card suppliers.
College students credit cards have been created by credit card companies who, back in the 1980's, saw the potential spending power of college students - which was estimated would be in excess of $100 billion per year.
A campaign to target students began
in the late 1980's, in the full knowledge that college students'
spending habits favoured brand loyalty and that they would in all probability keep the same brand credit cards for many years after leaving college. This fact is borne out by MasterCard who reported a significant percentage of former college students still retained their first credit cards for up to 15 years later.
How college student credit cards
Work
Credit cards for students are not dis-similar to other types of credit cards with the exception of a few key differences.
The main function of a college student credit card or a prepaid credit/debit card is that they are
designed for, and used by students or people who have little to no prior experience with credit card credit or other type of borrowing.
Student credit cards will in general have more restrictions on them than other credit cards. Students and young people especially will more than likely not have established a positive credit history.
Without a credit card history however, credit card suppliers perceive this group as being a high risk. For a start, there is no track record of a positive payment history nor of managing credit card credit responsibly.
To counter the risks to themselves, a requirement by some credit
card companies is that credit cards for students are co-signed
by parents, making them responsible in the event the student should default on repayments. Parents however, retain control over whether or not the credit limit on these cards are raised
or remain the same.
The credit limit on these college student credit cards tend to be in the region of $500 - $1000 per month. Even though this amount is lower than for other regular credit cards, the limit is seen as being more than sufficient to meet the typical needs of a college student.
If you happen to be a young person or a college student, credit
cards for students offer a much needed line of credit. Apart from the fact that a student credit card enables you to experience the benefits of using credit and establishing a credit history at an early stage, college students credit cards becomes the gateway to credit card credit. It becomes all the more important why you should choose carefully which student credit card will work effectively for you.
Student Credit Card Recruitment Facts
College students might on the surface appear to be one of the most
unlikely groups of people for credit card credit. Yet, some of the credit cards for students offers directed at them is nothing
short of astounding.
This is because credit card companies are all too well aware that available money (credit) will reel in students. Various hard hitting campaigns by card companies have targeted college students with irrestible student credit card offers, which certainly seems
to have paid off.
The extent of the campaigns and incentives to reach students have included, free gifts; flyers in colleges; Internet advertisements; and even direct mailings. According to the Nellie Mae Company, in excess of two thirds of undergraduates have at least one credit card, with 20 per cent having four or more of them.
The Implications of A Credit Card For Student
Without doubt, credit cards for students are far easier to obtain today than has been the case over past decades. Many credit card companies are more than willing to offer students credit based on their perceived future earning potential as a college graduate.
A notable trend is also the fact that some college students may
not even need a parent to co-sign their credit card application
nor to have job to be pre-approved for credit. These credit card
providers are all too well aware that parents of college students
will more than likely cover their offsprings' credit card credit
debt than parents of young people who do not attend college.
Credit cards for students carry heavy responsibilities in terms
of their use and the future implications. If you intend to apply for a student credit card, here are some notes of caution:
Be careful not to omit to make your credit card payments. Remember, that a poor payment record will be reported to credit reference agencies or credit bureaus. This can seriously
damage your credit card rating score, making it extremely difficult for you to obtain future credit once you've graduated. For instance, not being able to rent or lease an apartment, a car or even to get a job.
Companies who supply credit cards for students take a dim view of students who over-extend themselves. You will more than likely be perceived a credit risk if your
student credit borrowing far exceed your income or your current credit history status. In such a circumstance, you could find that your student credit card is cancelled or that the fees and charges you have to pay for your card
increase significantly
The APR or interest rate on a credit card for student will tend to be higher than for other credit cards. While on the one hand this can help to minimise the risk of students overspending on their college credit cards, on the other, any default on credit cards for students can prove extremely costly in more ways than one. Apart from facing excessively high fees and charges, you may well have to face the
consequences of collection agencies or even bankruptcy.
The content on this site is purely for information purposes only and is not intended to replace your seeking professional financial advice
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