Going to college is a big step in your life. You are finally out on your own, and you are closer to being an adult. You also need to demonstrate financial responsibility. One thing you might consider is obtaining a student credit card. Before applying for a card, you need to understand what are student credit cards. This article will provide a detailed account of what are student credit cards and how to use them.
Understanding Student Credit Cards
So, what are student credit cards? They are cards for college students that will allow you to build credit. It is very important that you establish credit to obtain loans in the future. Most student credit cards offer financial education and resources. They will provide you with alerts and reminders so that you do not miss a payment. In some cases, you can earn rewards with the card. Some lenders allow you to get a lower rate and fewer fees to help you build your credit.
Here’s one of the things to know when asking yourself what are student credit cards. When you apply to rent a home or apartment, or in some cases, when you apply for a job, some people pull your credit as part of a background check. If you have never managed credit, you will not have anything to review.
If you graduate with good credit, you will have a better chance to succeed in life. At some point, you will want to get an apartment or a home. You might also want to buy a car or start paying for your own cell phone. A good credit history can help you achieve these goals. Therefore, a student credit card is a good place to start.
In addition, you need to start learning how the world of credit operates, and a student credit card can help you with that. You can look at your monthly statements and monitor your spending. When asking yourself what are student credit cards, you need to understand how the interest rates work, and how credit limits work.
Being away from home and away from your parents can be scary. A student credit card can give you peace of mind in case you run into an emergency situation. Your car might break down, or you might need to take an unexpected trip to the doctor. You can rest easier knowing that if you need unexpected money, you will have access to it.
There are some requirements that you need to meet to qualify for a student credit card. To apply for a student credit card, you must be at least 18 years of age. Some companies require people under 21 years of age to provide proof of independent income. They want to make sure you can pay your bill. If you do not have any income, you can become an authorized user on your parent’s account. Your credit limit will probably be under $500.
You need to understand that not all cards are the same. Companies vary in their rates, fees, and benefits. Some cards offer an introductory period in which you pay no interest. Make sure you know when the no interest period expires, so you can get your balance as low as possible. Make sure you know when your payment is due, and pay it on time. Most student credit card companies provide online tools to help you monitor your account. Use them to your advantage.
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How to use Student Credit Cards
Apart from knowing what are student credit cards, you also need to make sure you use the card wisely. Here are some tips on how to use the card.
• Only spend what you can pay off each month
You might have every intention to pay off the card each month. However, it is easier said than done. It is so easy just to keep putting purchases on a credit card. Do not get stuck in that trap. Make a budget of your finances. Save some money, pay your bills, decide what you need in spending cash, and then set aside what you are going to pay on your credit card each month. Do not spend more than you have. If your parents are paying the bill, get with them to decide how much they will pay each month.
• Begin with only one card
Getting approved for a credit card is exciting, so it might be tempting to apply for more than one card. However, doing so will hurt your credit score. Use your card for at least a year before you try to obtain another card. It is a good idea to keep all cards open, even if you are not using them. This will help your credit score.
• Keep your credit utilization low
If you cannot pay your balance each month, you need to keep it as low as possible. If you have low credit utilization, your credit score will improve.
• Don’t let rewards tempt you
Many student credit cards might offer travel or cash rewards. It is fine to take advantage of this, but do not spend more than you have just because you want to cash in on the rewards. For now, you need to set your attention to using your card responsibly, so you can establish a credit history.
• Make your payments on time
You should never be late on making your payments. Know when your due date is approaching, and pay the bill. If for some reason, you cannot pay the full balance, at least make the minimum payment. Many companies allow you to set up automatic payments. Therefore, the money will automatically be taken out of your checking account.
• Know the rate and fees
Many student credit card companies charge a much higher rate for a cash advance or balance transfer. Do not get a cash advance with the card.
• Use it to gain your independence
Do not purchase anything you want and expect your parents to get you out of a bind. Your parents have their own obligations, and they need to be saving money. Do not burden them with your bills.
• Look out for fraud
Unfortunately, there are many people who try to fraud consumers. Make sure you check your bill and check your credit report to ensure there are no unauthorized purchases. Most companies will protect you against fraud. This is probably, the best tip you will get on the topic ‘what are student credit cards.’
Parents like to shield their kids as much as possible from the real world. However, reality needs to set in. They need to understand that, if you ever want to purchase a car or get a loan, you need to establish credit. You need to know what are student credit cards and you need to use them responsibly. Make sure you make payments and keep your balance low. You will then prove that you are responsible with money, and you will be on your way to a bright financial future.