10.05.09 | Why Students Shouldn’t be Scared of Credit Cards
Sometime over the past 60 years the view on credit cards has moved from revolutionary novelty to overused crutch that millions of Americans blame for their financial woes. But credit cards, which have been around since 1950, are an important financial tool that everyone should have in their arsenal, especially college students as they are working toward building a solid credit foundation. If you act responsibility there is absolutely nothing to be scared of.
When credit cards were first introduced they were only valid at select restaurants in New York, but today they are a widely accepted form of payment almost everywhere you go. The advent of the Internet placed even more weight on this mode of payment over the past decade. In fact, nearly 60 percent of all online purchases are made with a credit card, opposed to debit cards or third party companies like Paypal. Simply stated, credit cards provide you with the means to make a purchase today with the promise that you’ll pay it back with interest tomorrow. So if that’s all a credit card is designed to do why all the fuss? Why are people scared to own one? The two reasons I hear most often from students are that they are uncertain about credit card fees and fluctuating APR’s. Oh ya, and that Mom and Dad are telling them they better not get a credit card or else.
It’s true that credit cards carry fees, and it’s also true that your APR can fluctuate, but once you understand how and why those fees and changes occur you’ll see there’s nothing to be scared of. Then, after you explain to your parents that you understand the pitfalls that accompany credit cards they will be more inclined to sign off on the idea that you are a responsible young adult ready to take the next important step.
Common Credit Card Fees
- Annual Fee: a yearly fee charged for the convenience of having a credit card
- Application Fee: a fee charged for completing an application
- Cash Advance Fee: usually a 1-3% fee per cash transaction
- Late Fee: a charge made for missing the due date on your monthly payment
- Over-the-limit Fee: a charge made for exceeding your credit limit
- Return Check Fee: a charge for having insufficient funds to pay your bill
The good news is that all the fees listed above are avoidable. The annual fee and application fee can be avoided if you find a company like Citibank that doesn’t charge them. Citibank has designed two cards, the Citi mtvU and Citi Forward card, exclusively for students with no annual or application fees and great reward benefits. The additional fees listed are avoidable if you simply act responsibly.
Knowing your APR
- APR Purchases: generally you will have one APR for purchases and one APR for cash advances and balance transfers
- Introductory APR: these are generally offered to entice you to sign up and then increase at the end of the introductory period
- Penalty APR: your rate will increase if you are late on a monthly payment (usually two or more times)
- Tiered APR: Pending how much you owe will reflect a different APR tier.
It’s important to note that you can call your credit card company at anytime to request a rate reduction as your credit score strengthens. In fact, with the Citi Forward card you can earn up to a 2% APR reduction when you make a purchase, stay under your credit line, and make on time payments 3 billing periods in a row. Again, acting responsibly benefits you.
So what is there to be scared of? Spend within your means, establish positive credit history, and earn points you can buy cool stuff with. If that’s scary than I hope to be frightened for the rest of my days.
The best college cards for students: Citi mtvU & Citi Forward card
ScholarshipPoints code: RESPONSIBLE
The Student Credit Blog is sponsored in part by:
As the article mentions, a large amount of the fear comes from the parents perspective they pass down to there children. I believe that if High Schools would have financial literacy classes that provides student with the knowledge of credit and how to avoid debt, college students would find it easier to consider getting a credit card.
October 6th, 2009 | #
As mentioned in the article above, credit cards were created to build solid credit. Most students look at learning as a chance to become something great in life. building your credit leads you to the bigger picture in life. The House, the car and the expensive vacations, everything comes down to how well your credit is.
October 7th, 2009 | #
I think students should only have credit cards unless they aboslutely need them. It can be too much of a temptation and can get you into trouble.
October 7th, 2009 | #
Wow. I never thought if it like that. thanks for the info. it helped alot
October 7th, 2009 | #
for some people being scared of certain thingss can help them through the future
October 7th, 2009 | #
People in general need to be educated better on credit cards. Young people see them as a luxury. Unfortunately it is way too easy to fall into the credit card trap. Education classes in high school would be a great way to show teens the pros and cons of credit cards.
October 7th, 2009 | #
ya this is some great info. what about like a Kohls card or other stores that offer in store credit cards, are they a good idea?
October 7th, 2009 | #
credit cards are good to have for real emergencies. I always keep mine in the back of my wallet just to make sure I do not see it and become tempted to use it on everyday purchases.
October 7th, 2009 | #
you only need a credit card for an EMERCENCY not to this does not mean to pay off the fast food but to pay let say emergency car repairs ; because without a car you can go to work and make money to pay off your car
October 8th, 2009 | #
i have a credit card i use for gas and food only, it allows me to build my credit without using it for pointless buys.
October 8th, 2009 | #
haha i was scared to get a credit card but i got one so i can use it to build up good credit!
October 8th, 2009 | #
I need a credit card I ait scard.
October 9th, 2009 | #
I promised my parents I would be smart about my credit
October 9th, 2009 | #
One thing every credit card article I’ve read always mentions but never explains is APR. What is it?
October 10th, 2009 | #
Ummmmmmmmmmmm……….. I knew this already.
October 10th, 2009 | #
I don’t like credit cards, I’m not affraid of them. I find the temptation too hard to resist, when you don’t have or make allot of money you tend to buy or do things that normally you would have waited to do. Because you have that little card you do things you shouldn’t sometimes and wound up in trouble. Also the credit card company’s or banks charge more than they say or advertise. Either way if you get a credit card you should already have money and not rely on that card to get by. You have to be able to pay off the amount used within six to twelve months an pay payments on time or else you will only hurt your credit not make it improve.
October 11th, 2009 | #
Hmm… well i still think that credit cards are a horrible idea and that everyone should stay away from them. they destroy your life
October 11th, 2009 | #
Credit cards are essential in building credibility for your financial capacity. Credit cards are often mis-used by their owners because it is easy to get carried away with spending. The easiest way to avoid this is to dedicate the line of credit you open to one or two minor expenses. This will show the bank that you are reliable. You can also buy larger items such as a laptop and pay off the price tag over time in large lump sums. This strategy will actually look better to banks as long as you make payments before due dates. You are also more likely to be able to extend your credit limit if you ask for it.
October 12th, 2009 | #
Credit cards make my life easy, but i have to keep in my to not spend on what i dont need.
October 13th, 2009 | #
i think that if your very responsible you have nothing to worry about.Having a credit card signifys independence && trustworthiness.I say get that credit card & show your independence
October 13th, 2009 | #
i agree with amber that credit cards are a bad idea
October 14th, 2009 | #
you only need a credit card for an EMERCENCY not to this does not mean to pay off the fast food but to pay let say emergency car repairs ; because without a car you can go to work and make money to pay off your car
October 14th, 2009 | #
Credit cards need to be used carefully. Otherwise they will be in debt with a high interest to pay off.
October 14th, 2009 | #
Always good to have for emergencies.
October 16th, 2009 | #
Credit cards are necessary, however many people tend to abusise their purpose. I believe in the beginnin a credit card should only be used when the user has the money on them, in order to build their credit score. After a couple of months of paying off their credit debt instantaneously, the user should then decide to make bigger buys. Its all a game.
October 16th, 2009 | #
credit cards should be used for emergencies only to many people get into debt because of them
October 16th, 2009 | #
i really dont like credit cards…
October 16th, 2009 | #
If one is responsible enough in keeping records of all purchases, it’s not that difficult to stop one’s spending. The problem with credit cards is that they’re based off credits. One doesn’t actually see the money going out of your hands therefore one just lets it build up.
October 16th, 2009 | #
i disagree with amber. i have my own credit card and Im doing perfectly fine. Its people who constantly spend their money on material objects and people who dont know how to save their money who get into trouble when owning a credit card.
October 17th, 2009 | #
i knew most of this already
October 17th, 2009 | #
this is some good info…. i have a credit card(2 acually) and i have been tasked with managing money daily.. i’ve had my moments where i wanted to buy something that i thought i needed but at the end of the day i did what i kno needed to be done.
October 17th, 2009 | #
credit cards are bad!!! They shouln’t of never came up with that idea. Yea it’s a good way to carry money. But then its a bad way because it will mess up you credit. I never had a credit card and I plan not to get one. I’m cool with my debt card.
October 17th, 2009 | #
Wow. That’s useful information.
October 17th, 2009 | #
Credit cards need to be used carefully.
October 18th, 2009 | #
I am very scared to use credit cards. This article really helped me realize that if you use the credit cards in a responsible manner then they are a great tool to use in an emergency.
October 18th, 2009 | #
This article was very informative
October 19th, 2009 | #
Credit cards are great… if your responsible.
October 20th, 2009 | #
this can’t help me. I have $300 worth of credit card debt. Maybe some advice on how to get money to pay that would be more helpful. >_<
October 20th, 2009 | #
I think credit cards are good in some ways, they just need to be used wisely.
October 20th, 2009 | #
I don’t think credit cards are that bad… personally i’m still in high school (12th grade) and legal (18) and i have a credit and debit card!!! Of course I have a job which pays my credit card bill and I put the extra in my debit account… works out just find if you are responsible!
October 21st, 2009 | #
I WANT TO START BUILDING MY CREDIT. I THINK CREDIT CARDS FOR STUDENTS SHOULD ONLY BE FOR EMERGENCIES. YOU HAVE TO BE SUPER RESPONSIBLE INTO ORDER TO MAINTAIN IT AND MOST IMPORTANTLY HAVE A JOB!
October 21st, 2009 | #
I do not think credit cards are bad. I have had one since my junior year in highschool and now I am about to graduate from college. You learn a lot of resposibility when it comes to usage. There is a lot of minor details that you have to consider and understand which I think I will always dislike but I feel that credit cards are beneficial when used appropriately.
October 21st, 2009 | #
I think credit cards are a good way to build your credit for future things like buying a house or car, and sometimes even getting a job.
October 21st, 2009 | #
Credit cards can be killers, with the super high interest rates the Bush administration opened up for these credit card companies and forcing them to double the minimum payment deal. Personally, right now a credit card is a very risky gamble.
October 22nd, 2009 | #
i have NO credit but i really want to start building good credit. i keep getting rejected.
October 23rd, 2009 | #
Credit card have both good and bad consequence. I think students need to be more certain about what they are getting into with them.
October 23rd, 2009 | #
students are easyky targeted by credit card companies, some students can use their credit card wisely and some just don’t understand how the credit card can mess up their credit score if they misuse their credit card
October 24th, 2009 | #
im going to apply for a credit card once i turn 18. (which is in 2 weeks!! yaeh!!!)
October 25th, 2009 | #
I want one credit card just in case I need it to pay for my books in college, I use it for emergenices ONLY.
October 26th, 2009 | #
i’m scared of credit cards
October 27th, 2009 | #
People keep saying credit cards should be used in emergencies, but emergency situations–where you need to purchase something expensive, but you don’t have the money for it–is precisely NOT the moment when you should use one. *That* will get you in debt. You should use a credit card to make small purchases which you are absolutely, 100% *sure* you can pay at the end of the month, no matter what. That’s how you slowly build up your credit. If you want to buy something which you don’t have the money for, don’t touch your credit card, don’t even *look* at it–it’s a piece of plastic with no value added to it.
October 27th, 2009 | #
I have a debt card but now I’m thnking of getting a real Credit card and maybe build some credit
November 3rd, 2009 | #
It’s common for students to be afraid of using credit cards, especially if they do not know how it will affect them. In regard to this, it is the responsibility of the parents to teach their children how to properly use a credit card so as not to repeat previous mistakes and the sole responsibility of the student to successfully manage his or her finances. Every student should properly use a credit card, spending only as much as they know they could pay off.
November 3rd, 2009 | #
thats a gud thing Lizabeth….am thinking the as wel
November 6th, 2009 | #
Good info
November 8th, 2009 | #
thanks thanks
November 11th, 2009 | #
the information is helpful but i just cant get my mothers vocie out of my head “dont get a credit card, DONT!!!”
November 12th, 2009 | #
Thanks, but no thanks
November 16th, 2009 | #
i have one just in case something comes up.
November 18th, 2009 | #