Student Debt and Credit Education Blog

Many students are bombarded with a variety of credit card offers and advice, but it can be difficult to weed out the good information from the bad. Some people preach that credit cards are evil and that there is no need for a student to have one. Other people say that every person over the age of 18 needs to have a credit card. So which is correct? Should students have a credit card or not?

First, I should mention that due to some fairly recent changes, students can no longer obtain a credit card without either a) proof of income or b) a cosigner. This ensures that students cannot get into too much debt without a means to pay for it. While for parents, it can be scary giving your child a card, here are some ways students can benefit from having a credit card.

Why credit cards can be beneficial

• To learn responsible spending – This is the most important part of having a credit card. Credit cards get a lot of negative attention because of debt, but if students learn responsible habits early, the negative effects are 100% avoidable. A student’s first card should have a low limit, and be paid off on-time every month (not just paying the minimum). Prepaid cards are great because there’s only a set amount the student can spend. By establishing good habits early, students can actually benefit from having a card, which brings me to my next point…
• To build credit – Building credit is extremely helpful for students later on in life. Having a strong (and lengthy) credit history can set students up for their post graduation lives. With good credit, students can obtain student loans at lower rates, finance new cars, and even buy a house. (Note: Debit cards do not build credit. While they do help students become financially responsible, they are not a line of credit like a traditional credit card.)
• To use in an emergency – Credit cards can come in handy when you’re in a bind. If you have an emergency (such as running out of gas), credit cards can be a lifesaver. Plus, for students who travel a lot or plan to go abroad, they are a great safety net for unexpected travel issues.

Why credit cards can be dangerous

• The temptation to spend is greater than it is with cash. It is much easier to swipe a piece of plastic than it is to hand over a pile of bills.
• Missing a payment or building up too much debt can seriously harm your credit score.
• You could develop bad spending habits at a young age.

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What it boils down to is that as long as you exercise self-control, and spend only what you can afford to spend, having a credit card is actually a good thing. If you are someone who cannot exercise spending restraint then having a credit card could hurt you. Credit cards are not inherently bad, and when used properly, can help students get through the college years and emerge financially strong with a solid credit background.

For loans (including private student loans), student credit cards or investments that involve compounding interest, there are two popular interest rate related terms.

Annual Percentage Rate, or APR, is a measure of how much interest will be on an annual basis without taking into account compound interest.

Annual Percentage Yield, or APY, is the same interest rate measure, but accounts for compound interest – a better measure of how much you will actually pay in interest. Banks and credit card issuers often express credit card interest rates in APR, in order to better hide just how much interest would cost.

Learn more, Read:

What is the difference between APR and APY?

If you’re 18 or older, odds are you’ve received at least one student credit card offer in the mail. Often times, the bright colors on the packaging and awesome-sounding introductory APR can blind us to the fact that maybe it isn’t exactly what we’re looking for in a credit card or that we don’t need credit at this very moment. (more…)

According to the Free Financial Dictionary, credit score is defined as,

A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person, which is the perceived likelihood that the person will pay debts in a timely manner. A credit score is primarily based oncredit report information, typically sourced from credit bureaus / credit reference agencies.

In laymen’s terms, a credit score is an at-a-glance measure of risk for banks. The higher the number, the less risky you are to lend to or be given the ability to charge purchases to a line of credit. (more…)

If you’re in the market for a credit card – be it your first or not – the complexity of picking one can be overwhelming and pretty confusing. There are tons of different features and benefits in play such as Purchases APR, Balance Transfer APR, annual fee, cashback, etc.

Let’s outline a few basic rules to make the process easier and less stressful for you. (more…)

It is extremely important to make sure your credit card payments are made on time.  A late payment can lead to additional charges and a dip in your credit score. It’s true! Part of your credit rating is based on your ability to make payments on time, and even one late payment can hinder your ability to take out a mortgage or finance a car in the long-term.

Here are some easy ways to ensure you never miss a credit card payment.

Use automatic bill pay. Imagine being able to pay your bills without having to lift a finger. It’s possible. If your bank allows you to set up an automatic bill pay, use it. You set the date each month and your bank automatically deducts the amount you wish to pay.

Set an alert for when you will pay your bills. You don’t need a full planner to keep track of bills. It’s very easy to set up an alert on your phone or email to remind you when you need to pay online or mail out a check. For example, Google Calendar lets you set up an alert that will send you an email or text message on the day you want to make a payment.

Dispute unfair charges. If you are unjustly penalized for a late payment, you can dispute it. The first thing you will need is documentation. Print out bank statements or credit records and take note of the dates. The best evidence you can provide is a printed copy of an online pay receipt. If you pay your bill online, you will often get an email from the bank’s website telling you when you have submitted a payment. Print this page out and keep a folder handy to log all of your payments.

Hey everyone! Are you looking for ways to improve your credit score? StudentPlatinum has just added a page with four simple steps you can take to Improve Your Credit Score for Free.

The first of your options is to talk with a credit expert from a debt counseling company to develop a personal credit management plan.  The people at Credit.com can help you make sure you don’t go into debt by maintaining an adequate credit score.
If you’ve had a few glitches with your credit, you can review it and fix it at no charge. Freecreditreport.com can provide you with your credit report and credit score. If you have a high credit score, keep up the good work. You may be eligible for appealing rewards. If your credit score is on the lower side, a Credit.com expert can provide suggestions on how to improve this.

Since building a high credit score has become so important these days, why not start as soon as possible by opening up a credit account in college? You can use your card to make regular payments on things like food, books, and gas while at school by applying for a student credit card like the one offered by Discover. If you already have money for these items in your bank account, and were planning on paying for them with cash, think about using a card and paying the company directly instead so you can reap any rewards they throw your way for regular and on-time payments.

If for some reason you find yourself in multiple debts, one final step that this article mentions is to consolidate these debts into one payment, and reduce your debts significantly. This will make it much easier for you to keep track of your debt and eliminate it altogether in no time at all.

Make sure you check out the article. I hope you will find it helpful!

I don’t consider myself an especially “green” person. Sure, I turn off the lights when I leave a room and I don’t throw trash on the sidewalk.

I am also a huge fan of going paperless when it comes to my banking. This is not to because I care about Mother Earth one way or the other, but because the benefits of going paperless are pretty far-reaching:

Avoid late fees – Going paperless and doing all of your banking online is a very responsible and easy way to avoid making a late payment and dealing with the ensuing charges. There are few things more harrowing than being just a couple of days shy of a payment due date and having to rely on snail mail to get your bill sent in on time.

Further, many credit card companies add a specific time to their due dates. In other words, your payment may be due July 15, but read a little further and you will see it’s actually due on July 15 at 1:00 p.m. So if you have a slow mailman who gets your bill in at 1:30, you get stuck with the late charge.

With online bill pay, not only do you avoid the treachery of the slow mailman, but you have the option to sign up for an automatic pay option. Many card company websites allow you to set up a time every month when your payment will be made automatically. Essentially, you don’t even have to remember when your bill is due. Now that’s being responsible!

Easier to avoid identity theft – It wasn’t so long ago that paying a bill online seemed like an easy way to get your identity stolen. But these days it might actually be safer to pay online. Card companies have devoted a lot of time and money into beefing up their online security. Not only that, paying online allows you to avoid having your bills and statements stolen out of the trash by dumpster divers, compromising your personal and financial information. Paying online gets rid of the paper trail.

(Remember to always be smart about online banking. Change up your password from time to time and don’t leave yourself logged in on a public computer.)

Stay on top of spending – Want to hear something archaic? There was a time when people wrote down every purchase they made in a little bankbook. Some people, at the end of every month, had to sit down and balance their checkbook. Crazy, right?

With paperless online banking, you can see every purchase you make down to the cent, quickly and easily.

If you are a delinquent cardholder, meaning you have a slew of added fees and charges for payments made past the due date, you might consider re-aging your credit card to get you back on track.

It’s an increasingly common tactic employed by cardholders and their credit card companies. Here’s how it works. If you were behind in your payments by a few months, you could request that you card company erase those late payments and fees.

So why would a card company do that? Credit card companies want you to use your card. It is worthless for them to have an unpaid balance left alone month after month. In most cases, you will be required to make an immediate payment (typically one larger than your standard monthly payment). You may need to agree to a new plan that will likely require higher monthly payments.

Late payments can be a stain on your credit report and keep you from being approved for future credit cards, auto loans and mortgages. Re-aging is a savvy way to get back on track to being a responsible cardholder.

The people who advertise credit cards are smart people – and by that, I mean they are very good at using flowery language to disguise some of the hidden fees and penalties that can arise from using their cards. As a responsible credit card user, you have to be able to decode that language so you don’t end up paying excess fees. Here is a look at some of the more common tricks.

You may exceed your card limit - Your credit card will have a limit, but it’s not exactly written in stone. This can be beneficial in an emergency, but many companies want you to go over your limit regardless. The reason? The more you spend on the card,the more you owe, and if you go over your limit, you can now be charged fees and face interest rate hikes. Fun!

Transfer a balance- Not only will you pay a much higher interest rate on balance transfers after the promotional period ends, you will likely be hit with an extra 3% fee for each balance you switch over. Here are some more things to look out for when transferring a balance.

Low minimum payments- Most credit card companies offer low minimum monthly payments (typically around 2%-4% of the balance). The problem with this is it stunts your ability to pay off the full debt and will ultimately cost you more in interest. Here are some more benefits to paying more than the minimum.

0% APR on purchases for six months: This is a clever way to make you used to using your card for everyday purchases so that once the promo period is up, you start paying a much higher interest rate.

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