Why Student Credit Cards Could Vanish in 2009
I’m sure you’ve seen the news concerning the mess the banking industry is in. It’s a monster with a long tail as evidenced by the ripples its causing through Wall Street, job markets and the economy as a whole.
Many students have already found out student loans are harder to get and for the very same reasons, students may find getting a credit card in 2009 nearly impossible.
What is the Banking Crisis?
A number of things such as banking deregulation, a booming housing market and shoddy oversight of the mortgage business all contributed to this mess. What occurred is basically everybody looking to cash in on the skyrocketing housing market and allowing people who had no business taking out loans to do just that.
US banks loaned out billions in sketchy loans, or bought those loans from other sketchy lenders. When the economy started to shrink those homeowners started defaulting on mortgage loans. This caused a cash shortage in many banks resulting in a ripple effect on businesses and other banks which depended on those banks for money.
Now we have a situation where banks just don’t have as much money as they used to for loans. They are forced to be much more careful about who they are going to give loans to and unfortunately since students generally have low or no income and a limited credit history, they are on the wrong end of the safe borrower spectrum. This is why we see student loans becoming more scarce.
Fortunately the government realizes going to college is a good thing and students need those loans so they are working ease this situation. If for the same reasons banks decide to stop handing out credit cards to students, do you think the government is going to step in and help them get credit cards? Unlikely.
The beginning of the end for Student Credit Cards
If you were among those who found it incredible that students suddenly could not get loans for college then you’ll find its no surprise that banks are already pulling their student credit cards off the market. Why? Well a credit card is is pretty much a loan. You are allowed to borrow up to a fixed amount of money which then needs to be payed back at a certain interest rate. A few months ago Bank of America stopped offering credit cards for students. Now we have just learned that Chase and Capital One could be doing the same thing by the end of the year.
So What Can I Do?
- Be really careful about your credit score. If you don’t know it you should find out and find out how to protect it. It is possible to get a free credit score and you should get familiar with it.
- Look into getting a student credit card now (below), before it’s too late. It is a good time to start building your credit, as a lot of people have learned the hard way as of late. If you wait, you may not be able to build credit and by the time your ready to purchase a new car or house it could be too late.
Scholarship Points members can try to win a free college scholarship with the following code for 10 points: BUBYECARD
5 Most Recent Student Credit Card Blog Posts:
The Student Credit Blog is sponsored in part by:
its a great thing for student that are responsible
it is nice to have an extra cr card,but i have enough,thanks
Credit cards may helps but they are pain in the butt.
I don’t know if I can trust myself with a credit card just yet. I know I can get into a buying frenzy at the local Gamestop.
But, it wouldn’t be a bad idea to start building a positive credit rating.
great for student
i’M KINDA OF SCARED TO GET A CREDIT CARD TO BE HONEST.
I have to agree with micheal, but i think i would go shoe shopping instead.
i acually dont have one… they dont inerest me
GOT ONE TOO MANY! BUT WORKING ON GETTING RID OF…
I think it would really suck if credit cards got cut off for student because its already hard to pay for your education and credit cards help a lot
It’s nice to see that they aren’t taking too much advantage out of students. Bad credit can be a real issue that follows you to retirement.
well, if people know how to use them properly without getting in debt it wouldn’t be so bad
People should not only go according to thier credit score.
Beware of pros and cons of the credit reporting agencies and creditors.
We people should not only go according to our credit score. Since our credit score has nothing to do with our income
The banks and even credit unions got what they’re coming to them.
you should be wise about what you use your card on..
Students view credit cards as free money…it’s not. thanks for the reminder
i agree with alex just be very responsible and careful when you credit cards
people should just realize credit cards aren’t just a way to get free money and pay only a minimum balance later. Thats where you get into trouble…
Students should not have credit cards while in school because they cannot pay for them.
Dijohn – You are correct if your talking about irresponsible students. Students SHOULD carry a credit card to build their credit and use for emergencies and small purchases to earn rewards. If you cannot be responsible enough to manage your student credit card, then you probably should not carry one. But remember, credit cards are extremely important in order to build your credit history.. and you must have good credit if you plan on taking out loans for a car, house, etc.
as a student you should not use credit cards on a regular basis however it is good idea to build credit with very small purchases and maybe a cell phone bill
Rachel – Thats a good idea. A cell phone bill, or something that you HAVE to pay monthly is great to put on your credit card. Personally, I will link my checking account to my credit card and keep the money required for those items in there and pay it with my Credit Card. When my statement arrives, I simply pay off the credit card bill with the funds that are already there waiting in my checking account!
i dont think im going to use a credit card. i see them as being a huge problem.
It is a good way to establish credit, however, dont let temptation overcome you!
This article is actually a great way to tie in the current crisis with student opportunities. Very useful and very relevant!