Student Credit Card and Credit Education Blog

These days it’s not a matter of “if” your credit score will drop but how far for so many Americans who continue to struggle just to stay above water.

As you would probably expect there are different tier levels based on the infraction.  The tier is much different, for example, for an individual who simply misses a payment versus an individual who has a property fall into a foreclosure status.

Below is a list of common mistakes that affect your credit score in an adverse way and the point hit you can expect.

Do you know your credit score? Review your credit score for FREE NOW.

Credit cards come with cool benefits these days ranging from fantastic rewards programs to those that let you upload the picture of your choice to dawn the front of your card. Many companies have made it cool to be a member. But what they can’t offer you is something you may already have, tenure.

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 a 12% interest card to 0% interest card for a limited time in order to stave off increases in the total amount owed, but applying for new forms of credit will get more difficult in the future. Still, if this is your master plan don’t cancel your old card. Just pay off the new 0% card and then cancel that new one.

The Bottom line: Older is better in the world of credit cards.

Monday Rant!

I’ve been reading comments from students, parents, and many others stating that credit cards get you in debt when that could not be further from the truth.

Look gang, credit cards are not the culprit, it is the people using them irresponsibly that are to blame for their own fate.  I guess I’m just sick of the blanket statements made that credit cards are bad.  It’s not fair to those of us who use them responsibly.

Are debit cards bad too?  You could spent more than what is in your account and be hit with overdraft charges.  Bottom line: It’s about being responsible.

I do respect those who say, “I don’t trust myself with a card.”  That at least makes sense to me.  You are not ready and you know it.  I respect that.  But for the others who think credit cards are the devil you really need to educate yourself.  You can either use your card for good or bad.  It can help or hurt you.

For those of you who have already accrued credit card debt you may want to read, “Credit Card Debt Solution,” but for the rest of you who have not yet traveled down that credit road you hold your credit future in your hands – quite literally.

We all know that credit cards help you build your credit history. However, some people think that in order to build your credit score you have to carry a balance on your card at the end of the month. This is not true. You will build your credit history whether you pay your credit card off every month or carry a balance.  In fact, it is actually healthier to pay off the balance on time every month. When you carry a balance you have to pay interest. The more money you carry over, the more interest you end up paying in the long run.

If you do end up carrying a balance from month to month make sure it is a small one. It is also important to keep a low usage ratio.  If you credit limit is $5,000 and you carry a balance of $2,500 that is a 50% usage ratio which is not good. You should keep your credit card usage ratio as low as possible.

The holiday season is now officially upon us. Before long you’ll be shuffling off to family events and eating far more than your belly can handle. Of course getting presents for loved ones and friends is also part of that holiday tradition, and it can cost you a pretty penny at that. However, there is a clever way to score some of those gifts, cash in your reward points. You can totally hook up your family and friends with some swag just by using your card. Let’s map out your master plan to making this years holiday season the most cost effective one yet.

1. Take advantage of those 6 month 0% APR offers that credit card companies like Citi are offering
2. Earn points toward merchandise by purchasing gifts with your card
3. Maximize the ways you earn points

That’s it. It’s as simple as 1-2-3. You can spoil your friends and family without any heavy lifting. All you need to do is put the gifts you were already planning on buying on your credit card, pay the bill at the end of the month (0% interest remember), any then sit back and reap the reward benefits. The best card by far for scooping up mad points is Citi’s Forward card for students.

The Citi Forward card offers its new members a 0% APR on purchases and balance transfers for six months, if you qualify, and gives you ample opportunities to score some sweet points.

You earn one point for every dollar spent and five points for every dollar you spend on books, movies, music, and restaurants. In addition the Citi Forward card rewards you 5,000 points when you sign up for paperless statements within three months of opening your account and hands you another 6,000 points after $250 in purchases are made within the first three months. You also earn 100 points at the end of every billing cycle for simply making your minimum payment on time and staying under your credit line. So basically, you are handed 11,000 points right out of the gate. How sweet is that?

Below is a sampling of reward gifts you may qualify for along with their current point value.

So save yourself money this holiday season with Citi’s Forward card. Reward your family. Reward your friends. Reward yourself.

Best Rewards Card for College Students: Citi Forward card

ScholarshipPoints code: GIFTSRULE

As Little Miss Platinum I enjoy taking my plastic to the mall just as much as all of you do.  All of us twenty-something girls probably first discovered our love for the mall and shopping while playing Mall Madness at slumber parties. The goal of this game was to be the first player to buy six items on your shopping list and get back to the parking lot. Each player received their own credit card which made purchasing items a piece of cake.

However, that was just a game and in real life we usually have to think twice before swiping a credit card.  Credit cards are great when they are used responsibly, but as Mall Madness taught us as kids, the plastic has to be backed up with cash. This is the time of year when we tend to start shopping a lot. Between Christmas presents and new outfits for holiday parties having a credit card can lead to a lot of damage. Damage can lead to having to improve your credit score.

Over the years I have learned this the hard way. I have made purchases with credit that I could not back up with cash. However, I now consider myself to be a responsible shopper.  Little Miss Platinum’s shopping advice is this:

1: Never spend more that what you already have in the bank.

2: Do not be fooled by this evil four letter word: SALE. If something is on sale it is not automatically a justified purchase.

3: Before you make a purchase think about whether or not the item is a need or a want.

4: If you are unsure about an item do not be afraid to think about it for a few days because, unlike the game, making a purchase is not a race.

ScholarshipPoints Bonus Code: MALLMADNESS

Many students become frustrated when they learn a cosigner is required when completing an application for a private student loan. Some because they’ve been on their own for a while now and don’t feel the need for a “babysitter” while others feel trapped because their co-signer options are severely limited. So why do lenders require a co-signer anyway? It’s simple, they want that warm and fuzzy feeling.

I guess the best comparison I can make is if your brother or sister ask to borrow a $100 bucks from you. That can be a risky proposition, right?  Now say Mom or Dad tell you they will guarantee that you’ll get your money back over a certain period of time, say 2 weeks with an additional $10 bucks in interest for fronting the money.  Wouldn’t that make you feel more secure?  Wouldn’t you lend those dollars with more confidence?  A bank works the same way.  A co-signer is the banks safeguard to ensure repayment, but a co-signer can also be your best friend too.

Co-signers often reduce the cost of borrowing.  An individual with strong credit history can help you receive better pricing.  Obviously the lower the interest rate that gets extended to you the better off you’ll be.  You’ll just want to make sure that both you and your co-signer do a credit check before you apply.  It always makes sense to review and fix your credit prior to applying for a private student loan to ensure you get the best rate available.

Review and Improve Your Credit Score

APPLY for a Private Student Loan

Credit card debt is at an all time high with millions of Americans drowning in that deep sea of plastic. Wouldn’t it be nice if you could just mold your credit cards into a frisbee and toss your troubles away?  That sounds like heaven to me.  Unfortunately, however,  life is not that easy.  Our actions hold consequences, but there are options for those out there who are struggling to stay above water with their credit card payments.  Let’s outline a game plan to help get you out of that plastic sea and back on shore.

For those with solid credit: If you have good credit but are burdened with huge monthly payments than you may want to apply for a Discover More Card.  You can transfer over your balance from cards with high interest rates. There is a 0% APR for up to 12 months on balance transfers, then a low 11% APR thereafter.

When getting a new credit card is not an option: If transferring the balance on some or all of your credit cards is not a possibility because of your credit, but you have a lot of credit card debt, you should apply for credit card consolidation.  In some cases you can stretch out your payments for 72 months making your monthly payment more manageable.

Consolidating more than just credit cards: If you have other unsecured debt besides credit cards, (car loans, home loan, etc), and want to consolidate all of it, you should use a debt consultation service. This is for individuals who have a minimum of $10,000 of debt.

ScholarshipPoints code: DSOLUTION

The fact you understand the value of owning and using a credit card responsibly puts you light years ahead of most students your age. You see the big picture at a time when most are just focused on the here and now. After all, knowledge as they say is power and knowing what it takes to build good credit, recognizing the difference between APR and APY, and being familiar with the term “two cycle average” puts you on a completely different stratosphere than most.

Still, it’s good to review these three important aspects of credit while educating those who are new to the world of personal finance. As you are aware the sooner you realize that you are the one who holds the key to that new car and big dream house the sooner you can get started building a credit foundation worthy of turning those dreams into reality.

1. How to build good credit

Knowing what makes up your credit rating is very important. There are five key markers that go into your FICO score calculation with a credit card serving as a key ingredient in four out of the five key categories.

• 35% Payment history
• 30% Outstanding debt
• 15% Length of your credit history
• 10% Recent inquires on your credit report
• 10% Types of credit in use

2. The difference between APR and APY

APR is your annual percentage rate while APY is your annual percentage yield. APR is the measure used to calculate how much interest will be accrued on your principle balance annually without taking compound interest into account. APY on the other hand is the same interest rate measure, however, it also accounts for the compound interest making it a better indicator of how much you will actually pay in interest.

3. Two-Cycle Average Daily Balance

This is the credit card industries dirty little secret. How the two-cycle daily balance works is simple: instead of computing your average daily balance for the current billing cycle, it computes the average daily balance for the current and previous billing cycle. You want to find a credit card company like Citi that does not take advantage of students by putting in place a two-cycle average daily balance billing cycle. What this two-cycle system means for you is that you pay more money in interest each month.

Let’s take an example. Say you have a starting balance of $1,000 on a credit card with a 15% APR. If you do nothing all month your finance charge will be computed as such:

(APR * days in billing cycle * ADB) / days in year = interest

(.15 * 30 * 1000) / 365 = $12.74 interest

So far, so good. But let’s say that you had a starting balance of $1,500 the previous month, and a starting balance of $1,000 this month. Your two-cycle average daily balance would be $1,250. If your credit card uses two cycle average daily balance, you will now pay:

(APR * days in billing cycle * TCADB) / days in year = interest

(.15 * 30 * 1250) / 365 = $15.41 interest

Establishing positive credit is obvioulsy important but getting the best card to use as your conduit is equally important. That’s why the Citi mtvU Platinum card and Citi Forward card continue to top our list of best cards for students. From rewarding students for having a good GPA to lowering your APR when you make a purchase, stay under your credit line and pay on time 3 billing periods in a row they are in a class of their own. It’s fun to dream big, but it’s even more fun to live that dream.

The best college cards for students: Citi mtvU & Citi Forward card