Student Credit Card and Credit Education Blog

With the number of defaulted credit cards on the rise in the U.S. it’s no surprise that student credit cards are in trouble. Banks have remained deathlike while trying to rebound from the sub-prime mortgage crisis, and have proactively sought ways to insulate themselves from further losses. Those ways include lowering credit limits, being more selective with applicants, and closing accounts, which have hurt students badly. But through the dense fog of the student credit card industry shines a beacon of light. Citibank is offering the Citi Forward Card for College Students.

We were so impressed with the Citi Forward card that it instantly earned the title of Best Overall student card (a StudentPlatinum first).  So why all the hype?

The hallmark of any great card lies within its benefits package, and the Citi Forward card does not disappoint with a wide array of benefits. From good grade rewards to having your APR dropped up to eight times for responsible use of your card, they have it covered from A to Z.

Key Benefits

• The credit card that rewards you for good grades
• Up to a 2% purchase APR reduction when you make a purchase, stay under your credit line and pay on time 3 billing periods in a row
• 6,000 bonus points after $50 in purchases are made within 3 months of account opening
• 5,000 bonus points when you sign up for paperless statements within 3 months of account opening
• 5 rewards points for every $1 you spend on dining, books, movies and music. 1 reward point for every $1 you spend on other purchases
• 0% APR for 6 months on purchases and balance transfers

Points Program

• You can redeem your rewards points for gift cards, music and electronics, but also for student loan rebates, statement credits and charitable donations.

• But here’s the best part, if you don’t find a rewards benefit that you like, call Citi and they’ll come up with a unique plan just for you. It’s called Your Wish Fulfilled. How cool is that?

Important Note:  The Citi Forward student card is for students who have decent credit.  If your credit is subpar check out the best card options for you here.

ScholarshipPoints members, enter code  FRWDTHINK for 10 entries toward a free scholarship!

No. You don’t need perfect credit to get a loan. Credit grantors may consider a number of other factors, such as your income, assets, length at current residency, and employment history, in addition to your credit score, when determining whether to extend credit. The criteria may also differ from creditor to creditor.

Checking your own credit report will not hurt your credit score.

Personal inquiries are not included in your credit report and therefore are not part of a credit score calculation. So go ahead and check away!

Born August 1, 1981 MTV is older than most of you. Sadly I was around and remember when it launched. The early 80’s were a fun time; a time devoid of blackberries (except the ones you ate), where a text message consisted of writing a word on a piece of paper and holding it up to your buddy. Heck, Facebook founder Mark Zuckerberg hadn’t even been born yet. But things change.

MTV had the vision and foresight to move away from the music television format, which made them so popular, to focus on pop culture and reality shows. Today they are a global powerhouse broadcasting in 166 countries and in 18 different languages. They have proven to be one step ahead of the curve, which is why when they moved into the world of credit cards you knew it would be special.

The Citi® mtvUâ„¢ card issued by Citibank, is a credit card designed specifically for students and offers a unique rewards program for using credit wisely and receiving good grades. Twice per year, anywhere between 250 and 2,000 points may be awarded dependent on the student’s GPA (beginning at 2.5). These points can be redeemed for gift cards, CDs, a VIP mtvU Spring Break Pass, tickets to the MTV Video Music Awards, and even airline tickets. Below is the full complement of benefits this card has to offer!

Get ThankYou Points® for the things you do every day as a student, like:

• Earn Up to 2000 ThankYou Points Twice a Year for Maintaining a Good GPA
• Earn 25 ThankYou Points Every Month When You Pay on Time and Don’t Go Over Your Credit Limit
• Earn 5 ThankYou® Points for Every Dollar You Spend at Restaurants, Bookstores, Record Stores, Movie Theaters, and Video Rental Stores
• Earn 1 ThankYou Point For Every Dollar You Spend on All Other Purchases

The Citi mtvU Card is a part of ThankYou Network®, a free program that lets cardmembers redeem their points for amazing rewards like:

• Gift cards
• Travel
• Electronics
• Music

Plus Exclusive mtvU rewards like:

• VIP Passes to mtvU´s Spring Break
• Tickets to MTV Video Music Awards

And, get 10% off music, electronics, and all sorts of things at shop.mtv.com

You don’t tug on superman’s cape, you don’t spit into the wind, you don’t pull the mask off the old lone ranger and you don’t charge your whole tuition bill on a credit card! More and more students are turning toward their plastic lifeline to bail them out, but the problem is it acts more like an anchor than a flotation device.

Credit cards are great for emergency situations and for small affordable purchases (so you can build credit by making ontime monthly payments). However, throwing two or three thousand on your credit card for school is not only irresponsible, it’s downright foolish. Granted if you can pay off the outsanding balance quickly it’s not really be a big deal, but if you are using your credit card to pay for tuition I am guessing you will not be paying it off quickly.

Now I know some of you will claim this is an emergency situation, to pay for school. And while I certainly champion anyones desire for higher education you also need to weigh the cost benefits. I can tell you without hesitation that borrowing money at a 14.99 percent rate is a recipe for disater if you are not responsible about it.

It is so easy to watch a $2,000 dollar balance turn into $5,000. Next thing you know you’re late on a payment, then it’s impacting your FICO score, and finally you wind up having creditors harassing you on the phone everyday to send in your now inflated $500 minimum payment.

Below is a list of alternatives you should consider before taking such drastic measures with your plastic.

Sometimes it’s even best to work and save money for several months and then go to school, which is what I did. It made me a better student too.

I urge you to exercise restraint and be responsbility with your plastic. A moment of weakness could cause a lifetime of regret.

A new study to be released Monday by Sallie Mae, finds that the average undergraduate carried $3,173 in credit card debt last year, the highest recorded to date.

According to the USA Today article, the higher the grade level, the higher the debt.  College seniors who carry a credit card had an average of $4,138 in credit card debt in 2008! With the recent increases in interest rates due to the bad economy, this debt is likely to be far worse in 2009.

What does this mean?

Students are using their credit cards for more then just emergency purchases.  With the increase of tuition, gas prices, groceries, etc, students are using their cards for everyday expenses as well as school expenses.  This is very, very dangerous.  Student cards have very high rates to begin with, and it will take you years to pay off your debt once you graduate.  As we stress over and over again, only use your credit card for small purchases and pay it off in full each month.  This will not only keep you out of debt but will also help build your credit score.

What can you do?

If you are one of the unfortunate students mentioned above that have found themselves swimming in debt at an early age, don’t worry – there are many things you can do to manage your debt.  For starters, read our article “Three ways to get out of debt.”

If you are an underclassmen, apply for scholarships!  You never know when you will need the money, and this is money that you do not have to pay back!  We have two great scholarship options for you that do not cost you a thing:

Student Scholarship Search – An online directory of scholarships updated on a daily basis.

ScholarshipPoints – A free scholarship community where members earn points towards monthly scholarships up to $10,000

Take action early!  You will be thanking yourselves for years to come.

As mentioned in a previous blog post – “Credit Card Spending Down; Trend will Reverse“, banks are loosing money due to people spending less due to the shaky economy.  Recently, banks have been combating these loses by increasing the credit limits on outstanding balances.  Therefore they will earn more when people miss a payment.

From the Wall Street Journal -

Bank of America Corp. will hike interest rates on as many as four million U.S. credit-card customers who carry a balance, according to The Wall Street Journal.

Other banks, facing delinquencies, have also increased the rates for customers carrying a balance.

What does this mean for students?

For most students who hold credit cards, this will not affect you because you most likely have a card with a somewhat high interest rate already.  According to the article, banks are increasing the rates on cards with balances that have low interest rates – around 7-9%.  However, this is just stresses the point that you should pay off your balance in full each month! As this article proves, credit card companies own the right to do whatever they want with your interest rates once you carry a balance on your card.  If you only put a small amount on your card each month, and pay it off in full, you will gain the benefits of having a credit card such as building your credit score and reward points, but will not have to worry about debt and ridiculous rate increases.

Want to build your credit score without worrying about debt?  Consider a prepaid credit card. You can use a prepaid card just like a credit card, but can only spend the money that you put on it from your checking account, which is a great option for students. Learn about prepaid credit cards here.

Debt getting out of hand?  Read our blog post to find 3 ways to get out of debt.

Don’t Apply for Numerous Credit Cards

Credit card application volume can really hurt your credit score. Every time you apply for a new card your credit score is looked at by the card’s bank. They need to do this to see how it fares with regards to the requirements of the card your applying for. And everytime they check your credit, your credit score takes a small, temporary hit. Therefore, you should be careful of how many cards you apply for at once. Don’t be lured by special offers or cards that have a cool picture on it.

Stick with Older Cards!

Establishing a credit history (and improving your score) is easiest when you have a card for a longer period of time. FICO prefers this and is highly recommended over switching cards every year. Granted, you may have the option to transfer balances from say a 10% interest card to a 0% one in order to stave off increases in the total amount owed for a short window of time, but the APR after your 6 month window may soar like a Kite in Chicago. Bottomline: the status quo is just fine.

An eye-opening article posted recently by CreditCards.com -

Credit card balances suffered their biggest percentage drop in more than 30 years in February, according to the latest Federal Reserve data, as consumers responded to the recession by reducing their reliance on plastic.

People are spending less, saving more and the credit card companies are cutting limits. It’s a triple whammy

Basically what is happening in the credit markets is that credit card companies are being forced to increase their limits on who they are willing to lend credit to making credit cards harder to get, especially for students.  Later in the article it explains how this trend will reverse -

Right now, the dominant trend is people paying down balances in anticipation of a rough year ahead. Later that trend will reverse as people are forced to pay back basic expenses on credit cards

What does this mean for students?  As we have said before, student credit cards are in trouble.  This is dangerous for students because it reduces their ability to build a positive credit score.  When students graduate from college with no credit history, it will be even harder for them to get a decent credit card, take out loans, etc.  When the “savings” trend reverses, and people are forced to use credit cards again, you are going to need a decent credit score in order to obtain a credit card with a good APR, rewards plan, etc.  Luckily there are still student credit card options for students with limited credit such as the Orchard Bank MasterCard, and prepaid credit cards which come with the guarantee that they will not put you in debt.

Keep your eye on the news.  What is happening today in the credit markets is likely to affect you in the future.