Student Credit Cards
Posted by admin on May 31, 2009
When I was an undergraduate student, you could walk through the student union on any given day and be handed a couple applications for student credit cards. In the spring and fall, there were big booths set up outside giving away shirts, mugs, music and cash. The banks were trying to lure new applicants for student credit cards and it worked. It was so easy to get a credit card. I did not know one person who was denied. Yet I knew plenty of people who only paid their minimum balances each month and kept ringing up additional purchases on their cards. You can see why it was an easy sell. It was like free money during a time when most of us had little. With credit cards we could be wild and free. Oh, the places we could go. The amount of debt we could ring up.
There has been a lot of discussion within campus administrations and the government recently about marketing strategies regarding student credit cards. They have begun to realize that a lot of students are taking on the responsibility of a credit card before they have the knowledge and income to support it. Students are a vulnerable lot. Most are strapped for cash and are experiencing more freedom and independence than ever before. Give them a credit card and they may not know what they are getting themselves into. The results of a U.S. PIRG survey made public in March of 2008 examined the credit card behaviors of students. The freshman that were surveyed carried an average $1300 balance on their student credit cards, and seniors carried a $2500 balance on average. One quarter of the students in the study had paid a late fee at some point. 5 percent of the students surveyed had been so behind on payments on a card that it was canceled.
Banks who offer student credit cards claim they are doing so responsibly. Student credit cards provide a chance for students to build a foundation for their credit history. Banks also cite studies that indicate that the use and abuse of student credit cards is not as bad as the U.S. PIRG study claims. Other studies indicate that a mere 30 percent of students actually have credit cards and the average balance carried is less than $500. Many credit card companies are now offering free seminars to help students learn to budget and manage their finances responsibly. They feel that student credit cards can be a responsible and invaluable resource.
University administrators do not want to ban student credit cards from campuses. They simply want to assure that banks offering them on their campuses are doing it in a way that is not predatory or misleading. Student credit cards can be a great financial tool for students, if they are used responsibly and with full respect to what can happen if the bills are not paid.
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On that date, these new limits take effect:
* Credit card companies are required to give 45 days’ warning before changing the terms of consumers’ credit card agreements. The old limit was 15 days’ warning, a term that was so short that consumers often didn’t receive the letter warning them of oncoming changes until the date of the change had arrived. This new federal limit will give you plenty of warning of changes to your student credit cards, instead of getting announcements belatedly or with too little time to do anything.
* Credit card companies must mail out statements substantially earlier than before, giving consumers at least 21 days to pay their bills. This will put an end to the old trick of sending out statements too late for the customers to pay them on time, resulting in late fees, interest rate hikes, and other penalties that put more money in the companies’ pockets and destroy consumers’ credit ratings.
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Research potential issuers thoroughly before submitting any credit card applications.
You will find that general credit card websites function as clearing houses for many different types of cards that are grouped into categories relating to their specific purpose (i. e. , student credit cards and credit cards for people with bad credit). All you need do is click on the link to the most approprate category for your circumstances and review the various offers contained therein.
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