01.16.09 | Why Student Credit Cards Could Vanish in 2009
I’m sure you’ve seen the news concerning the mess the banking industry is in. It’s a monster with a long tail as evidenced by the ripples its causing through Wall Street, job markets and the economy as a whole.
Many students have already found out student loans are harder to get and for the very same reasons, students may find getting a credit card in 2009 nearly impossible.
What is the Banking Crisis?
A number of things such as banking deregulation, a booming housing market and shoddy oversight of the mortgage business all contributed to this mess. What occurred is basically everybody looking to cash in on the skyrocketing housing market and allowing people who had no business taking out loans to do just that.
US banks loaned out billions in sketchy loans, or bought those loans from other sketchy lenders. When the economy started to shrink those homeowners started defaulting on mortgage loans. This caused a cash shortage in many banks resulting in a ripple effect on businesses and other banks which depended on those banks for money.
Now we have a situation where banks just don’t have as much money as they used to for loans. They are forced to be much more careful about who they are going to give loans to and unfortunately since students generally have low or no income and a limited credit history, they are on the wrong end of the safe borrower spectrum. This is why we see student loans becoming more scarce.
Fortunately the government realizes going to college is a good thing and students need those loans so they are working ease this situation. If for the same reasons banks decide to stop handing out credit cards to students, do you think the government is going to step in and help them get credit cards? Unlikely.
The beginning of the end for Student Credit Cards
If you were among those who found it incredible that students suddenly could not get loans for college then you’ll find its no surprise that banks are already pulling their student credit cards off the market. Why? Well a credit card is is pretty much a loan. You are allowed to borrow up to a fixed amount of money which then needs to be payed back at a certain interest rate. A few months ago Bank of America stopped offering credit cards for students. Now we have just learned that Chase and Capital One could be doing the same thing by the end of the year.
So What Can I Do?
- Be really careful about your credit score. If you don’t know it you should find out and find out how to protect it. It is possible to get a free credit report and you should get familiar with it.
- Look into getting a student credit card now (below), before it’s too late. It is a good time to start building your credit, as a lot of people have learned the hard way as of late. If you wait, you may not be able to build credit and by the time your ready to purchase a new car or house it could be too late.
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Intersting, credit cards definitely don’t seem like they would help you “save money.”
November 25th, 2008 | #
This blog isn’t about saving money BUT, if you used a rewards card like the Citi Dividend Card or the Discover Open Road card you would get cash back on purchases. If you paid you whole bill each month you would not be charged interest. This means that you would pay the same for things as you would if you used cash, get charged no interest and get cash back effectively saving you money.
I personally use a rewards card. I get points rather than cash but I have a $900 set of golf clubs and a $300 camera thanks to those points I earned buying things I would buy anyway and paying my bill before interest was added. The clubs and camera we FREE because I was responsible. ANYBODY can do this if they are responsible.
November 25th, 2008 | #
I use rewards cards, because I can get cashback, gift cards, miles, etc. I usually pay off my bill, so I don’t have to pay interest. Or I try to pay within the free interest for whatever months time.
November 25th, 2008 | #
I’ve been wondering if I should get a student credit card for emergencies like when traveling home. If my car breaks down after sitting around all semester I’ll be walking. I guess now is a good time.
November 25th, 2008 | #
I REALLY wish i could build my credit. I’ve applied to these places but I am not approved coz i live on Guam. It sucks. Any better recommendations?
November 25th, 2008 | #
If you are fortunate enough to have parents who are USAA members (you have to be military either active, reserve, or retired) they have a fabulous college banking program. So long as your parents cosign you get everything you need. I’m a non-traditional student so this really doesn’t effect me but I’m keeping my membership just for my son so he won’t have these worries when he goes to college.
November 26th, 2008 | #
I have a very hard time with the whole intrest rate idea…any help fining more information on each specific card so that it would be more easy to decide
November 26th, 2008 | #
Hey Victoria, check out a recent blog here
http://www.studentplatinum.com/student-credit-card-blog/2008/09/24/who-cares-about-apr/
Should give you a better idea about what interest rates are and some specific cards.
November 26th, 2008 | #
I observed that alot off college students are constantly getting credit cards to pay for other things besides school and because alot of them live out in the world alone where they come from low class and middle class families such as myself which weare already set up for some type of crisis because the economy always turn down young people for jobs because they feel they we are never fit enought or old enough to complete a job, so we get credit cards hoping to pay them back and it dont always turn out how we want it to turn out because we have others things in life that we have to pay so these banks give us these credit cards so they can make a huge profit to send their children to college but does not care about other peoples children so i feel its thier fought for being so inconsiderate which puts them in debt becuase students cant always pay what they borrowed plus an extra large intrest rate thats outrages and not fare so this is why i feel they are going to stop student credit cards because they are going in debt trying to create debt for others and thats not right what goes around comes right back around
November 26th, 2008 | #
I just recently got a Visa through my bank and had no problem with it and I only work part time. The limit is low, but I don’t see myself needing to spen over $300 on anything.
November 27th, 2008 | #
Credit cards are good if you know how to use them.
November 27th, 2008 | #
Visa is the way to go. I hear ya angie
November 27th, 2008 | #
this is cool
November 27th, 2008 | #
Credit cards should be used wisely
November 28th, 2008 | #
Christina,
In that case why do you need a credit card, just use cash to begin with. Are the bonuses that great, or does the privledge of saying you have a credit card make you feel like a better person. Your ability to pay off the credit cards is a good selling point, but have they offered to increase your limit yet? Many companyies will perform an annual audit to see if they are able to increase you limit to the point you are not able to make the payments. And it is at this point you will pay an even higher interest rate because it will be base on several things and not just how much you have charged.
-Jimmy please play nice. From the sounds of it, Christina is the ideal credit card user. I save THOUSANDS (yes, thousands) of dollars every year by using a good rewards card on things that I would normally pay cash for (utilities, gas, groceries, everything) I simply pretend each transaction is a cash transaction, pay the bill off immediately, and earn up to 5% back on my purchases. And having a high credit limit only means you’ve been responsible enough that the bank feels okay about lending you more money. Having a low available credit to debt ratio is KEY to good credit.
-captain J
November 28th, 2008 | #
very helpful in time of need, people do get out of hand with them but i think it comes to great use when your low on money, which is always the case for college students. credit cards are nice to have in the time of need. just need to learn how to use them.
November 29th, 2008 | #
Student credit cards are a good idea because we need the opportunity to have access to money in some form. Being in college, I can admit that I have not always used my credit card on school, but it has been school related things. I believe students deserve low interest rates and low credit limits can help with managing credit card debt.
November 29th, 2008 | #
credit cards are only good if you know how to use them wisely. the cash back and miles etc arent that bad either
November 29th, 2008 | #
I already have a discover card. I got it when i was a undergrad in 2000, but I am so glad I have it now. Lots of people are having trouble and can only get pathetic limits. I ended up charging up to $1000 on books and fixing my car, but my mother taught me responsible spenidng so I have already paid it off.
November 29th, 2008 | #
I don’t want credit cards I can see where they would get people in alot of trouble if your not responsible
November 30th, 2008 | #
Donovan is right if your responsible it is a blessing, if not there really gonna hurt you.
November 30th, 2008 | #
Also, you need credit cards to build good credit, but you need to cap your spending at some point, and dont let your credit card limit be the judge of that.
November 30th, 2008 | #
I think that it is terrible what credit cards are doing to students it is bad enough that students have major debt by going to school now it is even worse with the credit cards.
November 30th, 2008 | #
I think credit cards for college students are good if they actually get paid off because then you build your credit score.
December 1st, 2008 | #
I don’t need another credit card. I am already in credit card dept up to my eye balls as well as student loans.
December 1st, 2008 | #
RCH–
Credit cards aren’t doing anything at all to students. It’s the student that has to make the decision to apply, spend, and NOT PAY what they owe on their credit card statements to get sunk in debt. As a recent graduate myself (with major school debt), I am very thankful that I discovered some of the many uses of responsible credit-carding in college
December 1st, 2008 | #
Every year we hear about the hundreds if not thousands of freshman that go into debt due to credit card offers, these students are out on their own now and should have the good sense not to buy something they can not afford.
December 1st, 2008 | #
I wish this wasn’t all happening because some of us just don’t have money, don’t have a co-signer, and can’t get loans. If we can’t get credit cards, how can we build up credit to be able to apply for our own loans?
December 1st, 2008 | #
I don’t want to end up in a situation where I’m owing large amounts of money to credit card company’s because of compiling interest. Any suggestions on what card I should apply for to prevent this and build a sturdy credit history?
December 2nd, 2008 | #
I think they are a good idea if you know how to handle your money to many students don;t and abuse the system
December 2nd, 2008 | #
Its one thing to have a credit card because your able to build your credit score, but its another to obtain a cedit card and reach far to point where you become a person in credit debt. I know because my mother dealt through for years. So I think that people should delibrately consider the good options of owning a credit card, and the consequences of owning a credit card.
December 2nd, 2008 | #
I feel that student credit cards are a good idea if you are capable of managing your money. Anybody can spend money; even a two year old, but it takes a disciplined person to budget their spending habits
December 2nd, 2008 | #
student credit cards are very helpful in saving in money if your responsible enough to use them , they come in handy for school supplies.
December 2nd, 2008 | #
Cards should be used in a very responsible manner
December 2nd, 2008 | #
I have always felt that credit cards took more of your money than they help save money. For people responsible enough, credit cards are good.
December 2nd, 2008 | #
If you are responsible enough, then go ahead, get a credit card. But if you aren’t good at managing money, FORGET ABOUT IT!! Credit cards will just put you really far behind in your finances and put you in debt.
December 3rd, 2008 | #
@Bri,
That’s just the thing, we want EVERYONE to be good at managing money. Hopefully by participating in these point activities and reading our blogs about personal savings, we can hammer that home.
December 3rd, 2008 | #
so far i’ve used my credit card wisely..
December 3rd, 2008 | #
You really have to watch how you use your credit card before it can get out of hand. I have a 500 dollar limit on mine, and thank goodness.
December 3rd, 2008 | #
have one never use
December 3rd, 2008 | #
yea use it or pay more for it
December 4th, 2008 | #
Use it wisely.
December 4th, 2008 | #
yes it is very important
December 5th, 2008 | #
I think the most important thing to do is to put a cap on how much money you can spend with your credit card. Then whether you’re responsible or not you’ll never over spend.
December 5th, 2008 | #
this is very need for student
December 5th, 2008 | #
honestly, I think credit cards keep people in debt. Look at the statistics for people who actually pay them off let alone monthly.
December 5th, 2008 | #
this all about being responsible about your credit also to learn to save your money and how to use it
December 8th, 2008 | #
this def.a great deal student will save money but they have to responsible and use thier money wisely
December 8th, 2008 | #
its a great deal for student but they have to be very responsible to use it
December 8th, 2008 | #
this a great deal for student they are saving money but they have to be responsible in order to do it
December 8th, 2008 | #
its a great thing for student that are responsible
December 8th, 2008 | #
it is nice to have an extra cr card,but i have enough,thanks
December 8th, 2008 | #
Credit cards may helps but they are pain in the butt.
December 9th, 2008 | #
I don’t know if I can trust myself with a credit card just yet. I know I can get into a buying frenzy at the local Gamestop.
But, it wouldn’t be a bad idea to start building a positive credit rating.
December 10th, 2008 | #
great for student
December 10th, 2008 | #
i’M KINDA OF SCARED TO GET A CREDIT CARD TO BE HONEST.
December 11th, 2008 | #
I have to agree with micheal, but i think i would go shoe shopping instead.
December 11th, 2008 | #
i acually dont have one… they dont inerest me
December 12th, 2008 | #
GOT ONE TOO MANY! BUT WORKING ON GETTING RID OF…
December 14th, 2008 | #
I think it would really suck if credit cards got cut off for student because its already hard to pay for your education and credit cards help a lot
December 14th, 2008 | #
It’s nice to see that they aren’t taking too much advantage out of students. Bad credit can be a real issue that follows you to retirement.
December 15th, 2008 | #
well, if people know how to use them properly without getting in debt it wouldn’t be so bad
December 16th, 2008 | #
People should not only go according to thier credit score.
Beware of pros and cons of the credit reporting agencies and creditors.
We people should not only go according to our credit score. Since our credit score has nothing to do with our income
December 16th, 2008 | #
The banks and even credit unions got what they’re coming to them.
December 16th, 2008 | #
you should be wise about what you use your card on..
December 17th, 2008 | #
Students view credit cards as free money…it’s not. thanks for the reminder
December 22nd, 2008 | #
i agree with alex just be very responsible and careful when you credit cards
December 22nd, 2008 | #
people should just realize credit cards aren’t just a way to get free money and pay only a minimum balance later. Thats where you get into trouble…
December 23rd, 2008 | #
Students should not have credit cards while in school because they cannot pay for them.
January 6th, 2009 | #
Dijohn – You are correct if your talking about irresponsible students. Students SHOULD carry a credit card to build their credit and use for emergencies and small purchases to earn rewards. If you cannot be responsible enough to manage your student credit card, then you probably should not carry one. But remember, credit cards are extremely important in order to build your credit history.. and you must have good credit if you plan on taking out loans for a car, house, etc.
January 21st, 2009 | #
as a student you should not use credit cards on a regular basis however it is good idea to build credit with very small purchases and maybe a cell phone bill
February 10th, 2009 | #
Rachel – Thats a good idea. A cell phone bill, or something that you HAVE to pay monthly is great to put on your credit card. Personally, I will link my checking account to my credit card and keep the money required for those items in there and pay it with my Credit Card. When my statement arrives, I simply pay off the credit card bill with the funds that are already there waiting in my checking account!
February 10th, 2009 | #
i dont think im going to use a credit card. i see them as being a huge problem.
February 14th, 2009 | #
It is a good way to establish credit, however, dont let temptation overcome you!
February 20th, 2009 | #
This article is actually a great way to tie in the current crisis with student opportunities. Very useful and very relevant!
March 4th, 2009 | #
important information, thanks!
March 4th, 2009 | #
i think credit cards could be dangerous if you dont watch how you use it.
March 5th, 2009 | #
Effort versus credit cards is a far better option when it comes to paying for college
March 12th, 2009 | #
Very important information
March 16th, 2009 | #
yeah
March 27th, 2009 | #
its totally tue. this is definlly worth reading.
important information
March 31st, 2009 | #
the 411 very important
March 31st, 2009 | #
i think the dividend card is the best. but thats just my opinion
April 3rd, 2009 | #
This goes to show just how much more careful you should be with a credit card if you have one
May 16th, 2009 | #
It’s all about responsibility. If you can pay for it, don’t charge it on a credit card.
May 27th, 2009 | #
I absolutely agree!
July 1st, 2009 | #
I agree
July 22nd, 2009 | #