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Student Credit Cards -- What You Need to Know Before You Sign Up

by Robert_Alan

Every college student can tell you that they have seen several
offers for student credit cards on campus. These credit card
offers are everywhere. They come in bags at the student book
store, in the student newspaper, and of course, online. But a
student credit card is usually hiding some traps for the
unsuspecting college student. If you are thinking about college
student credit cards, consider these factors before you sign up.

Pre-Approval

Most college student credit cards lure young people in with the
promise that they are pre-approved for the card. This
pre-approval process normally involves checking your credit and
deciding based on a number of factors that you would be a good
candidate for credit. If you have established good credit, the
pre-approval process confirms that you are able and willing to
pay back your debt on time and in full.

However, most college students do not have any credit. So the
pre-approval process simply involves confirming that you are a
student. This should make you suspicious. What it means is that
the company is willing to gamble that you won't pay back the
debt, providing them with added interest that could be in the
hundreds or thousands of dollars.

Interest Rate

This leads us to the issue of an interest rate. For most student
credit cards, the interest rate is enormously high. This is due
to the fact that they are taking a gamble on whether or not you
can pay them back. However, in order to lure you into signing up,
they may offer an interest free period.

This interest free period also comes with some traps. If you
miss a payment or are late once or twice with your minimum
payment, you could be subject to the delinquency rate, which is
as high as thirty percent in some cases.

Minimum Payment

Most people will look at a student credit card and think it will
be easy to handle because of the low minimum payment due each
month. But if you only pay this minimum payment each time, you
will end up with an enormous amount of interest due. Think about
it this way: If you owe one hundred dollars and the minimum
payment due is fifteen dollars, you will rack up interest in the
remaining eighty-five dollars. If your interest is twenty
percent, that's seventeen dollars added to your next bill. The
interest you accumulate is more than you are paying. So your bill
will actually get higher the longer you pay rather than lower.
Always pay more than the minimum payment.

Good Credit

The benefit to college student credit cards is that you can
build up some good credit history with a good payment record over
time. So always pay your bill on time and in full if possible. If
you can't pay your student credit card off in full each month,
try to at least double the minimum payment. Student credit cards
can be your learning tool for a future of responsible financial
management.

For more information on <a
href="http://www.creditcardassist.com/student/creditcards.html">student
credit cards</a>, Robert Alan recommends that you visit
CreditCardAssist.com

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