Student Credit Cards

Student Credit Cards And The New Credit Card Law

May 30th, 2009

choosecardsThe start of the coming school year will likely see a different scene in campus quadrangles than it was in the past.  With the new credit card law that prohibits offering accounts to students under 21 (with a few concessions), it’s highly possible that we’ll see a drastic reduction in the number of booths offering a selection of giveaways (like shirts, iPods and restaurant coupons) to applicants.

Protecting Students

It’s easy to understand why the new laws have been set.  Over the last five years, the amount of debt students have been carrying across numerous credit cards (an average undergraduate has four) have seen an alarming rise.  Instead of finishing school with their financial life ahead of them, they find themselves mired neck deep in high-interest credit card debt.

Exceptions To The Rule

Under the law, young adults under 21 can still get a credit card, provided they are able to show proof of capacity to pay (e.g. having a job) or have a legal guardian willing to co-sign the account.  Otherwise, credit card companies may not issue them any plastic the same way convenience stores aren’t allowed to sell them alcohol.

Effects

With most student credit cards aggressively marketed to freshmen, a change in marketing tactics is obviously necessary.  However, it is highly doubtful that the rule will be enough to deter credit card companies from trying to get new sign-ups.  While the current schoolyear might see a tad less marketing activity on the part of the issuers, it’s not likely to last for long.  For the most part, expect them to regroup, lay out a new marketing plan and come back strong with a different approach in the coming years.

Teaching Kids Credit Card Management

May 21st, 2009

teencardHow do you teach your teens credit card management?  According to most experts, the best way is to get them on it early via prepaid credit cards.

Prepaid credit cards work much like regular credit cards, allowing you to shop without cash, most anywhere you go.  Unlike regular credit cards, though, you can set the spending limit depending on how much funds you decide to put into it.  Whether it’s $100, $200 or $500, the prepaid credit card holder gets to charge only that and no more.

Many issuers allow credit card holders to apply for prepaid credit card extensions to their main account.  That means a parent can easily ask for prepaid credit cards issued to their children, which they can then use to give their kids allowance.  Some prepaid credit cards, such as those from Discover, are also enrolled in the rewards program (among other benefits), which means the children are able to make full use of features regular credit cards come with.

How exactly will this help teach kids credit card management, though?

1. Kids are exposed to responsible use of the card, forced to keep spending to within their “credit limits”.

2. With monthly statements, parents can get together with their kids to review their spending and talk about potential problems.

3. It helps educate them about what a credit card is about – a tool of convenience, not an avenue for unlimited spending.

4. It helps give them an idea of how to maximize rewards programs and other credit card benefits

University Of Florida Visa Credit Card Review

April 29th, 2009

floridauIf you are a student or an alumni of the University of Florida, you should qualify for a University of Florida Visa credit card.  The card itself is issued by Chase and comes with their Flexible Rewards Program.  There’s not much special about this card, although it may appeal to present students due to the better chances of getting approved for one (and the generally lower APR).

This card offers one of the better interest rates for student credit cards, at either prime rate plus 5.99% or 9.99%.  It comes with no annual fee and an introductory 0% APR for the first six months, applicable to both balance transfers and regular purchases.

Rewards points earned in the Flexible Rewards Program do not expire for up to 5 years, although there is a cap of 60,000 points you can accumulate for every calendar year.  There are number of ways to redeem your rewards under the program, including:

Travel Items. To live up to the “flexible” name, the rewards can be redeemed for travel items in a variety of ways, including round trip domestic tickets and conversion into miles with three set airlines (Continental Airlines, United Airlines and British Airways).

Gift Cards. Make sure to wait until you get to 5,000 points, though, as the lower point exchanges for gift card are just plain bad deals.

Gift Items. Chase has a decent selection of items available.

Cash Rewards. The conversion rate of points to cash rebates is pretty bad, so avoid it if you can.  A more interesting exchange might be to use points as a payment for other loans you have with the bank (you’ll need to consult with Chase for exact terms).

3 Things College Students Should Know About Credit Cards

April 25th, 2009

collegedebtWhen kids begin college, it’s almost a rite of passage to end up inundated with credit card offers.  They’ll get in the mail, in the activity halls, slipped under their doors and every time they hit the mall.  We’ve already stressed how important it is to educate college-going kids about proper credit card use but it’s one of those issues you can never point  out enough.

If you are a college student about to get your first taste of credit card use, make sure to keep the following things in mind.

1. A credit card is great because it starts your credit report

Getting your first credit account usually means the start of your credit history, an important step as you prepare for your financial future.  The earlier you can start a credit record, the more you will benefit from it, provided that you take care of your credit spending.

2. Choose student card offers

Students typically get all sorts of credit card offers.  Even if you qualify for most of them, it’s a better idea to go after credit accounts geared specifically for students as they usually carry perks that you’ll find beneficial, such as discounts to restaurants, bookstores and school supplies shops.

3. Save it for emergency expenses

Credit card is not income – that’s one of the lessons many students learn the hard way.  Hopefully, you don’t have to.  Keep your credit card as an emergency, in case your usual fund sources are amiss.  Refrain from using them on avoidable expenses, such as movies and music purchases.  Just because you can swipe, doesn’t mean you should.

Citi Forward Card Review

March 25th, 2009

citiforwardThe Citi Forward Card is a new reward credit card specifically geared towards young adults.  It’s created quite a bitt of buzz, thanks to Citi’s aggressive marketing campaign to bring it into consumer consciousness.

First, a word about Citi’s rewards.  Bear in mind that 100 Citi points converts to $1 worth of rewards, so don’t let the large points earnings trick you into making it look more attractive than it actually is.

With the cautionary word out of the way, let’s take a look at this rewards card in depth.  The basic rule is that you earn 5 points ($0.05 worth of rewards) for every dollar you spend on the following categories: dining, movies and music.  For all other purchases, you get 1 point for every dollar.

Cardholders get a bonus 6000 points after accumulating at least $50 in purchases for the first three months of the account.  If you sign up for the Paperless Statements (all your billing statements will be sent via email) within the same amount of time, you can get another 5000 bonus points.

Citi is also making a big deal of their 100 extra monthly points that you can get every time you settle your minimum payment on time without going over your credit limit.  While nothing earth-shattering (100 points is just $1 in rewards), it’s better than no incentive, right?

All cardholders get a 0% APR for the first six months, both for purchases and balance transfers (3% one-time fee).   If you’re single and spend much of your income on dining and entertainment, this will probably be a good rewards card to keep for the next few years, until you actually outgrow all those restaurants, movie and music expenses.  For most other folks, though, this doesn’t really sound all that interesting.

Young Adults And The Negative Effects Of Credit Cards

March 23rd, 2009

yougnadultsEver been curious how widespread credit card use is among young adults?  Check these numbers that may leave you shocked:

  • Over 50% of high school seniors have debit cards.  Not bad, right?  After all, debit cards are probably the easiest way for parents to send emergency money to their kids whenever they need it.  In fact, I’m surprised the number isn’t much higher than 50%.  The fun seems to end there, though, as….
  • Over 30% of high school seniors have credit cards.  Yes, that many young and largely financially immature 17 and 18 year olds carry their own credit cards under their own names, many of which aren’t supplementary at all.
  • Over 1/3 of all college kids have at least four credit cards before they graduate.  Considering I didn’t get my first credit card till about three years out of college, it really surprised me.  As long as they can be responsible about it, though, there should be no problem.  However…
  • Over 50% of recent college graduates have accumulated at least $5000 in high-interest credit card balances shortly after leaving school.  That is a serious financial problem right there.  Can you imagine being that neck-deep in debt already, with probably nothing to show for all your spending (considering that most college kids spend their money on restaurants, school supplies and entertainment)?

With those kinds of numbers, it doesn’t come as a surprise that the number of 18 to 24 year old young adults filing for bankruptcy has increased 96% over the last ten years.  Parents, do you know what your children are doing with their credit?

Credit Card For High School Kids

March 20th, 2009

If you thought this was a modern urban legend, rest assured it isn’t.  High school kids below 18 years of age can now get and use student credit cards under their name.

highschoolcreditIt’s true.  Credit card companies, looking for new markets to expand in, are now actively pursuing high school juniors and seniors as new credit card customers.

Parent Should Take Notice

If you’re a parent and hadn’t known till now, it’s time you took a close look.  Your kid may already be deep in debt without you even knowing it!  Even if they don’t fall into the debt trap this early, credit card use at an age where they are impressionable and (for the most part) financially unprepared can create destructive habits that can haunt them towards the later years of their lives.

High School Credit Cards Are Widespread

According to surveys across several states, as many as 1/3 of all junior and senior students have at least one credit card.  Unless they are accessory cards from parents who can monitor and discipline their spending habits, these kids are, for the most part, left to fend for themselves with a serious financial instrument in their pocket.

Do You Know What Your Children Are Paying For?

When your kids have their own credit cards, they are likely paying for all sorts of items without your knowledge.  While the danger of buying things they can’t afford is an obvious issue, an even bigger problem is their newfound ability to purchase medical treatment and drugstore purchases without a parent’s knowledge.

Educating Your Children

Proper education in responsible credit card use is a necessity now, more than ever, especially if this trend persists.  Don’t wait till its too late before you equip your children with the financial knowledge that can guide them through the rest of their lives.

Two Easiest Ways To Obtain An Unsecured Credit Card When You Don’t Have Credit History

March 4th, 2009

42-15868709If you don’t have credit history, obtaining an unsecured credit card will be a difficult undertaking.  There are two ways to do it, though.  If you can’t get either one to work, it might be best to start small with a secured credit card and start building your credit record from it/

1.  Have a co-signee

The good news is you are likely to be approved for a credit card if you get a co-signee, whether a parent or a guardian.  The bad news is, it’s not going to make applying for future credit any easier.  Since your record is backed by a co-signee, it’s just too easy to slot you in as someone who needs supervision before being trusted with credit.  Additionally, if you mess up your credit card use, it will reflect badly not just on your credit record, but on your co-signee as well.

2. Be a student

If you are a college student (and can prove it), credit card issuers are lining up to get you started on the road to credit.  That doesn’t mean you’re guaranteed to be approved, though.

There are two main requirements before being approved for a student credit card.  First, you will usually have to submit proof that you are a student.  That should be easy enough, provided you are really going enrolled.  Secondly, they check how many credit inquiries you have on your record.  If you applied for three cards consecutively, for instance, the number of checks done on your credit history will probably reflect badly and might get you disapproved.

Four More Awesome Student Credit Cards

February 12th, 2009

A few weeks ago, we gave you what we thought were the best, hands-down, student credit cards on the market. Here are a few more student credit cards that we feel deserve to bask in the same limelight.

Citi Driver’s Edge Visa For Students

This card gives students 3% cash back for all purchases made at gasoline stations, grocery stores and drug stores and 1% for all other purchase categories. You also get extra rebates depending on the mileage you incur on your car. It comes with six months of introductory APR at 0%, available for all transactions including cash advances, purchases and balance transfers.

Fidelity Investments 529 College Rewards American Express

Like other Fidelity-issued credit cards, this requires an account with the company. In this case, you need a 529 tax-deferred college savings plan under Fidelity. All rebates accrued via the 1.5% across-the-board cash back are automatically credited to your 529 account. It comes with an introductory 12-month APR of 0%.

Capital One No Hassle Cash Rewards For Students

This card offers 1% rebates on all purchases regardless of category and merchants. You also get an annual bonus of 25% cash back for your total earned rewards for the year. There is no cap on the amount you can earn with no expiration date on any earnings.

Citi Platinum Select For Students

The Platinum Select is a standard, non-reward credit card with an introductory six months of interest-free use (including balance transfers and cash advances). You also get to enjoy standard Citibank student privileges available via their website.

Why Choose Student Credit Cards Over Regular Credit Cards

January 23rd, 2009

While most students get a student credit card, they are actually eligible to apply for even regular consumer cards. However, credit cards geared towards students actually have some perks that may prove more lucrative than the typical consumer offering currently on the market.

For one, they have lower credit limits to help students, relatively new entrants to the credit market, to better manage their spending. They also don’t have co-signer requirements, usually a must for traditional credit cards when the applicant has no previous credit history. More than being a spending tool, student credit cards are really geared towards helping students begin to create a good credit history.

When the students graduate and leave school, they can opt to have their credit cards converted into a regular consumer card, hopefully with higher credit limits and better APR. While some credit card issuers will cancel the card if the cardholder is no longer a student, others may let you keep the plastic under the same terms. In some cases, student rewards – like cash back on restaurants, record shops and clothing stores – can be lucrative enough to warrant keeping it with the same terms, low credit limit and all.

If you are a college student, we highly recommend sticking to a student credit card. Getting approved for one will definitely be easier and the benefits are usually spot-on for the needs of college students. While the low credit limit may be frustrating, it helps ensure that you won’t get into too much debt while you’re young and your credit record can begin on a positive note.

noel Posted in Student Credit Cards