Student Credit Card and Credit Education Blog

If you’re a high school senior, then for a while now and over the next few months, you’re going to be seeing and hearing a lot about the cost of college. From student loans to scholarships, it can be a lot to take in. While paying for tuition, housing fees, etc. is obviously top priority, don’t forget that you are going to want to have a little extra spending money as well, especially if you’re planning to move away from home and live on campus.

Freshman year at college is a great opportunity to learn the value of a dollar and take your first few steps into the real world. If you’re not sure if you will have a job in college, you might be a little worried about walking around with an empty wallet, and that’s why you should start saving today.

Living on campus can be costly and so you should take precautions now to build up a nice little nest egg by the time the fall rolls around. Here are some easy ways to do that:

1. Open a savings account. Lets say you have a part time job that pays $150/week. If you could place $50 of that into savings, by September 1, you will have $1,000 saved up, with possibly a few extra bucks interest. Over the spring and summer, look for ways to continue feeding that account, from allowance money to high school graduation gifts.

2. Win scholarships. If you have access to a computer, you have access to tens of thousands of dollars in scholarship money available to high school seniors coast to coast. Simply visit ScholarshipPoints.com, where you can earn points for a chance to win scholarship money just by reading blog posts and completing activities. In fact, just for reading this blog post, we’ll give you 15 points to get started. Simply visit that link and enter the code: SAVENOW.

3. Find a student credit card. Now is as good a time as any to get your first credit card. Think of the expenses you pay for regularly – gas money, cell phone bill, going to the movies. If you pay for these with a credit card, and pay them off each month, you can not only begin to grow a credit score, but you can often get cash back savings and reward points. Get started with your credit card today!

If you’ve read the comment sections of many of our blogs, you’d see there is a very consistent tug between fans of credit and debits cards. What I’d like to do today is outline some of the major benefits of each so that we can all have a clearer picture of what each actually offers to its users.
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Even if your student loans completely cover your cost of tuition, college is an expensive time. Food. Books. Going to the movies. Buying a new jacket for the springtime. It all costs money. Unless you decide to cover all of your expenses with credit cards (bad idea), you might be faced with the decision of trying to find a job. But what kind of job is right for you? Here are some ways to decide.

First, make a monthly budget. Write down every expense you have, from your cell phone bill to your total food cost. How much do you usually spend on the weekend? Write it all down and add it up for the month. You don’t have to get it down to the cent, but this should provide you a clear estimate of how much money you’re spending.

Now is a good time to see where you can save. Instead of ordering out for pizza every other night, you could use your school’s meal plan. Instead of running up a credit card bill, you could use a card with a good rewards plan that will give you cash back on everyday purchases. Here are some more tips for huge savings.

Next, make a budget of your time. Never forget that your primary job in college is to study and get good grades so you can graduate. Do not take on a full-time or other such job that will cause you to take time away from class or study. How much time can you devote during the week? Should you work only on weekends?

Once you’ve figured out how much money you need and how much time you can spend, explore your options. Many colleges and universities are surrounded by businesses that cater to students and almost exclusively hire students. Some schools even have jobs on campus. One ideal situation would be to find an on-campus job that has some relevance to your area of study. If you’re in a biology field, for example, some schools offer paid part-time positions assisting in the campus laboratories.

Find a job with flexible hours, so you can take time off if necessary during finals week, for example. Be sure to check if you are eligible for federal work-study. If so, this could be a perfect situation. Many work-study positions are on-campus with flexible hours. Plus, it’s free money from the federal government that you don’t have to pay back.

ScholarshipPoints code: GETAJOB

If you’re new to credit cards, and are looking for a way to start your credit history without putting yourself in a position to overspend, a gas card might be right for you. Basically, they traditionally have a lower credit limit and offer various incentives for spending money at gas stations.

Why is this a good idea versus a normal credit card?

In my professional opinion, using a credit card for something you have to pay for anyway instead of impulse purchases is a much smarter way to build your credit history. If you have a car, gas is a normal expense that would go on your debit card or be paid with cash at each fill-up, so why not use a gas card and kill two birds with one stone?

If you’re interested in seeing more details about gas credit cards, have a look at our gas credit card comparison page.

In my experience, a big part of the process of picking a credit card is weighing all the different programs available to choose from. There are cards that give cash back, reward points, air miles, and all sorts of other benefits. Some cards even deposit a percentage of your purchases into a savings account in your name — kind of cool, right?

In a recent CNN Money article, I read that a new trend for banks that previously had raised interest rates due to the economic crisis is enhancing their reward card programs. For instance, if you have a credit card that gives 1 reward point for each dollar spent, you’d get 1.2 points going forward. That doesn’t sound like a lot based on the number itself, but a 20% increase is actually pretty good.

So, what could a college student do with these rewards? Well, let’s take a look.

Air Miles – Think about what you want to do in college. Is travel or study abroad part of that plan? What about spring break? A student credit card that earns air or sky miles for purchases could be used to bring down the price of your airplane tickets to and from your destination.

Points – Most point cards allow you to redeem them for gift cards, or magazine subscriptions, among other things. If you can, try to get gift cards for places like Amazon, Barnes & Noble, Borders, or Visa Pre-paid gift cards — you can use them to buy or help pay for your textbooks or supplies.

Cash Back – It’s difficult not to imagine the benefit of getting money back on things you need to purchase anyway. I often have used cash back rewards to take care of a monthly payment here and there when I was a little low on money or had to buy a book for a class.

Just as a note, this post is not meant to encourage students to go out and charge a ridiculous amount of money on their credit cards to earn reward benefits. If you have read my previous blog posts, you would know I advocate strongly in favor of being in control of your credit; my point is this, if you are going to be using your cards regularly to maintain a credit history, why not get paid back for it in a way you can use?

Image Credit to Xelaeel on Flickr

Let’s face it, college life can get pricey, and I’m not even talking about tuition costs. Every day, students from coast to coast throw their money away because (a) they’re lazy,  (b) they don’t know any better, or (c) both.  What many students don’t realize  is that some of the biggest costs in college can be easily avoided if you’re willing to be a bit resourceful.

If you have a meal plan, use it. Those meals are already paid for, and can save you big over grabbing a slice of pizza and a soda every night. When I was a student at Northeastern University, the cost of my plan came out to $9 per meal. At the end of one semester, I had twelve meals left over that didn’t carry over to the following year. That’s $108 down the drain.

Pay your credit cards on time. Credit card companies are notorious about late fees or other penalties for missed payments. Not only can this adversely affect your credit score later in life, it’s extra money you have to pay out of pocket. Here’s a tip: if you credit card offers online bill pay and automatic payments (and most do), set it up.

Set up overdraft protection on your checking account. Once in college, I accidentally overdrew on my checking account, and didn’t realize until the next day. During that day, I purchased a cup of coffee, a burger and fries, and a magazine despite having less than a dollar in my account. Total cost of those items? $12. Total cost after overdraft fees? Nearly $200. The coffee wasn’t even that great.

Buy your books online. It amazes me how many people still use the school bookstore to buy their books for class. You’re throwing your money away! Worse, those book buybacks at the end of the semester will give you only about 10-15% of what you paid for the book initially. While you probably won’t find every book you need for class, always check sites such as Amazon or Half.com to see if they have a used copy you can buy for cheap. You could save hundreds of dollars.

ScholarshipPoints Code: FORTUNE0310

Here’s a common concern in this crazy online shopping world of ours – keeping your student credit card out of the wrong hands. While this paranoia shouldn’t prevent you from responsibly owning a credit card and building a solid line of credit, you should take measures to ensure that you don’t get a call from your bank one day asking about suspicious purchases in Timbuktu.

Here are some ways to stay safe:

1. Go paperless. If your credit card company offers paperless billing, do it. Not only is it safe and convenient, you avoid the threat of “dumpster divers,” people who scour through your trash looking for old statements you have thrown away.

2. Look for the seal. Always check to make sure the website from which you’re making a purchase is safe and secure. If you don’t feel comfortable buying off a certain website, you should look for the product elsewhere. If you are using a credit card to buy something from a private person, use an intermediary such as Paypal.

3. Close accounts you don’t plan to use. There is no reason to have three credit cards open if you only plan to use two. If you have an extra card that you don’t need or use, cut it up and close the account. DO NOT stash it away in your dorm room.

4. Use your credit card only for emergencies. The easiest way to avoid many of the problems associated with credit cards it to simply use it only when necessary. Keep a credit card around only for sudden major purchases (medical bills, immediate transportation costs) and you should stay safe.

If you have ever seen the movie Confessions of a Shopaholic, you know that it can be extremely easy to work up a huge amount of credit card debt that can absolutely haunt you. In the movie, Isla Fisher’s character, Rebecca Bloomwood, had 12 credit cards — all maxed out — and dealt with the constant pressure of having to worry about paying it all back, while being constantly harassed by a persistent debt collector with bad personal hygiene.

Although that is just a movie, it is a very potent reminder of why we need to stay in control of our finances and truly know what we are getting into when it comes to credit cards. A student credit card is likely the first type of card that anyone owns when growing up and becoming an adult. It has high interest, and exists to establish the very beginnings of your credit history.

Here’s a few solid tips for keeping that shiny hunk of plastic under lockdown, and making the start of your credit journey a smooth and expected one:

1. Don’t use it for shopping. That’s right – I said don’t use it for shopping. I know you’re tempted to whip it out to buy those cute shoes… but just use your debit card. “Credit shopping” is the quickest way to overwhelm yourself in debt; if you really want something and don’t have the money for it, ask for it for your birthday or a holiday… don’t charge it with money you don’t have.

2. Set a low credit limit on purpose. Step two of Operation: Debt Protect is to put a cap on how much you can actually spend with the card. I recommend, in the beginning, to set it around $400. Also, make sure to tell the bank to set your account to decline your transactions if you go over your credit card limit. Sometimes it allows you to charge things anyway, and that racks up tons of hidden fees and very high interest charges. This particular method ensures that you never rack up more debt that you can handle making monthly payments for.

3. Build your credit with small, everyday purchases. Everyday purchases (like a bottle of soda, or a sandwich) are much easier to keep track of and pay back. One strategy you can use that looks good to credit bureaus is breaking up your monthly payment into 2 or 3 spread out small payments. For starters, this lets you keep super solid control over how much you’re spending, and it makes minimum or full payments much easier to afford. Would you rather pay $30 all at once, or $10 every 8 or 9 days? Sometimes you just don’t have $30 all at once, so this strategy can be helpful depending on your situation. Personally as a former student, I found it useful because I always got low on funds between pay days… and sometimes my credit card bill was right before I got my next check.

Do yourself a favor and use these tips to smooth out credit card issues well before they happen. A student credit card is something that everyone should have because you NEED a credit history to do practically anything significant later in life (buy a house, buy a car, get a job, etc.) It’s all about being responsible.