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College Student Credit Cards
By: Gary Mitton
College is the place where most of us get our first taste of financial freedom
and the responsibility that goes along with it. Inexperienced with debt, college
students may apply for a cash back credit card thinking that it sounds like a no
lose situation. They hope to charge large ticket items or living expenses that
they cannot afford to buy with cash and then receive a check for cash back at
the end of the year. Unfortunately, a free credit card offer can appeal to a
student for all the wrong reasons. Instead of building a good credit base and
starting out responsible buying habits, a college student credit card may be
used to live beyond the means of the average student. This can be a trap for
students and lead to years of credit damage and negative consequences.
The college student credit card
College students receive credit card offers on a nearly daily basis. They are
included in bags with new textbooks, campus purchases, and student run
newspapers. Offers for a free credit card also come in the mail marked
"Pre-approved". Faced with the idea of a cash back credit card, most students
are eventually lured into replying to one or more of these offers.
In addition, credit card companies, such as MBNA, offer cards designed to target
specific college students. This college student credit card comes in a design
that features the student’s university or alumni association and is appealing
for the sense of belonging and exclusivity it conveys. However, it also carries
some hidden dangers that the average college student misses in their excitement
to get their first credit card.
Drawbacks
A company that offers a free credit card to college students is familiar with
the sometimes precarious spending habits of the average student. Payments from
students are frequently late and the minimum payment due is the most some young
people ever try or are able to pay. This delinquency adds up to a lot of money
in interest and late fees that goes to the credit card company in the form of
profits.
Since a cash back credit card offers the incentive of a return on purchase
prices, the interest rates for these cards are usually very high. In addition,
the student applying has little or no credit and can only qualify for a line of
credit by promising to pay exorbitant interest rates if late or overdrawn. So in
order to lure students into applying, the lender may advertise a low interest
rate for a trial period, such as six to twelve months. But when the student uses
the free credit card, the balance accumulated ends up costing much more once the
higher interest rate takes effect.
But the most dangerous part of a college student credit card is the damage it
does to the student’s credit rating. This damage takes place long after the
purchases have been enjoyed and is usually not a factor in the decision to make
such purchases. Impulse buys and peer pressure can add up to serious credit
consequences. The average student has no real understanding of the implications
of bad credit, which could follow them into their careers and family life. They
could be denied a car or mortgage loan, as well as further lines of credit with
other credit card companies.
About the Author:
Compare credit cards and apply online for credit card using a secure credit card
application form. For more information on credit cards visit Compare Credit
Cards.
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