Personal Finance

Ups and downs of student credit

Students love to get their hands on their first credit card. Student credit can be used to pay for books and other campus expenses. You can pay for your meals through your student credit. Parents like to buy their kids a credit card to help them learn money management skills, which will help them throughout their life.

College students get bombarded with credit card offers. It is fairly easy to get a student credit card despite having no credit history or income. The variety of offers is great and often dizzying. With offers of rewards, low APRs and low fees, each credit company is trying to outpace its competition.

Students getting their first credit card are likely to be very naive about credit. This is where the parents are responsible for making sure that their kids do not go out and empty their bank accounts in one day. A student credit card should not be conceived as a blank check. In fact the risk of student credit is often underestimated. Bad use of credit could potentially ruin an individual’s finances right from the beginning and the recovery can be long and painful. Some students even drop out of college when they default on their loans.

A credit card is not a student loan. Student loans can come with low or no interest rates. It is not so with a student credit card. Be careful to plan your expenses so that you do not use your credit card for spur of the moment purchases and fail to pay them back regularly.

Once the credit report is spoiled, the mark can remain for years to come. Did you know that a late payment may potentially last for seven years? Get your credit report from a Consumer reporting agency to find out where you stand.

Having seen the scary side of student credit, there is no reason it cannot be a useful convenience if used properly. Pizza, books, CDs are all just one swipe away. Just be sure to pay your credit card bills or delay your purchases if you cannot repay.