The Pros and Cons About Student Credit Cards
Do you want to apply for a student credit card? Using a credit card can be great especially if you are starting to build credit history. Nevertheless, before sending your student credit card application, make sure that you are ready for your obligations as a cardholder. Check out the following pros and cons on using a credit card:
The Pros
Build early credit history. Getting a student credit card is a convenient way to establish credit. A student credit card does not require security deposit even though the student has no credit history. IF you are below 21 years old, ask help from your parent or someone with excellent credit to co-sign on your behalf.
Building early credit history while in college is a wonderful preparation for your future. Take note that the length of credit history is one aspect that determines your final credit score. Having a lengthy span of credit history shows your capability and consistency in dealing with creditors and managing accounts.
A good training to financial independence. Managing a student credit card is an effective training for young people since it gives them the opportunity to decide for themselves, exercise self-discipline and teaches them the value of timely payment.
Parents can lend the needed support for their kids by giving advice on using credit cards. Parents can also help out while their child is in the stage of comparing different student credit cards in the market. With their own experience as an adult, they can better motivate a teenager to be more conscious on responsible in using a credit card.
The Cons
The risk of overspending. For everyone who owns a credit card, there is always the risk of overspending. Indeed, teenagers are not the only ones who should watch out about credit card spending. Many people fall prey to credit card debt as a result of uncontrolled credit card use. However, for students, the temptation to spend can be a lot more especially since it will be their first credit card. This is why students are strongly advised to limit their spending and pay attention to their payments.
Maximizing credit limit. Credit cards for students have lower credit lines compared to standard credit cards. For this reason, youngsters are advised to avoid maximizing their borrowing limit, as doing so can pull down your credit score. Hence, before charging a purchase, check your credit line and be sure to leave 50% of your credit free from charges.
Increased amount of purchases. As a student credit cardholder, you need to be aware that penalty fees and interest rates are a waste of money. To avoid paying for such fees, make it a habit to pay your monthly balance in full and on time.
If your student credit card offers an introductory 0% APR, keep in mind that the zero interest is only applicable for a limited time. Once the introductory period ends, the regular interest rate will apply on unpaid balances.
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