However, the New Credit Card Law has made a few restrictions for young people who want to own a credit card. Today, a student can only qualify with a co-signer or if he/she can show proof of independent income.

The amendment to the credit card law was meant to cut down the number of bankruptcy and bad credit cases, particularly among students. With a parent or an adult as a co-signer, a teenager can have someone to guide them in managing a credit card account.

In this post, let’s talk about the steps that you can do to build up good credit history using your student credit card:

Choose wisely. Don’t get a credit card for the wrong reasons. Do not rush into signing up just because a card offers a promotional giveaway item or a low introductory rate. Always weigh your options, check out all the fees involved, and understand the terms of the Issuer. Ask your parent or someone with good credit history to help you out when doing comparisons.

Stick with one card. One student credit card should be enough for building credit history. Since your main priority is your studies and you do not have a permanent job yet, it’s only practical to stick with one credit card to handle.

Charge only what you can afford. If you’re going to charge a bill to your card, make sure that you can pay it in full on time. If you have any doubts, don’t charge it to your card. Remember, a $25 purchase can easily balloon to $50 because of the additional interest rate and late penalty charges.

Always pay the full balance. To avoid the interest rate and extra fees, cardholder must pay the full balance each month. Although you can submit only the minimum due payment, such a habit can be risky. The longer you prolong your balance, the bigger your debts become.

Do not submit multiple applications. Some students try out their luck by submitting multiple applications to different Issuers. Others sign up with no intention of getting the card just for a free mug or tee shirt. Watch out! You could end up with more credit cards than you can handle. Even worse, too many inquiries in your credit report can affect your rating.

Ask advice. As a new credit card owner, you should seek advice from your parents or from a family member who has more experience in handling credit. If you got your first credit card through the help of a co-signer, keep in mind that your co-signer’s credit history and your own credit history are both on the line. Be responsible in using your credit card.

As a student, how can you use your credit card for building good credit history? Check out these top ten tips for you:

Charge ONLY if you can pay it back in cash. To be on the safe side, you need to consider repayment before charging anything to your card. Will you be able to pay back that purchase on time? Do you or will you have the cash to make full payment on or before the due date? If you have doubts, the wise thing to do is to skip the purchase and wait until you have the means to do so.

Know your limit. Credit cardholders are prone to exceeding their credit limit. Nevertheless, there’s a very good reason why you should stay within your limit. For one, you can avoid the overdraft fees. Two, you can maintain a better credit standing and avoid the risk of uncontrolled debt.

Choose a no annual fee card. When choosing a college credit card, better choose one that carries no annual fee. Annual fees can range anywhere from $20 to $50. There are reward credit cards with annual fees ranging from $50 to as much $100. As a student, you should get a credit card with a reasonable interest rate and minimal fees.

Pay on time. Paying on time can save you $15 to $30, depending on the student credit card you have. Aside from avoiding the penalty fees, being a prompt payer can significantly raise your FICO score by up to $35%.

Check your statement of account regularly. Check your monthly billing statement and check your account regularly especially if you have an online access. If you notice unfamiliar charges, contact your credit card Issuer right away. Consumers have the right to dispute incorrect or unauthorized charges and you should exercise this right if you need to.

Don’t use your card for borrowing cash. There are student credit cards that allow you to borrow a cash advance through the ATM. Still, you should be aware that cash advance transactions are not covered by the grace period so you instantly incur the interest rate the moment you make the withdrawal. For most cards, the APR on cash advances are often higher than the interest rate applied on balance transfers or purchases.

In the past years, applying for a student credit card is very fast and no complicated requirements are needed. There are even credit card companies that hand out credit card offers to high school or college students like candy. However, this practice is about to change.

Last May 22, 2009, a federal law was passed by the United States Congress and signed by President Barack Obama. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 or Credit Card Act of 2009 will go in effect on February 22, 2009. This bill aims “…to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes.”

How the Credit Card Act of 2009 Will Affect Student Credit Cards

Here are some changes brought about by this bill when it comes to credit cards for students:
1. A student under 21 years of age can not obtain a credit card unless his/her parent, legal guardian or spouse (of legal age as well) is the primary cardholder.
2. Credit limit on such a card can not be increased without the permission of the primary cardholder.
3. Students under 21 years of age can apply for a student credit card without a primary cardholder to vouch for them IF they can present a proof of their regular income. Also, they won’t need permission to increase their credit limit IF they can present a proof of their regular earnings.

The New Credit Card Law: Is It Good News Or Bad News?

Having a credit card is one way of exercising your financial independence. It gives the cardholders the freedom to manage their own accounts.

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Some students might find this as bad news since it will be difficult to apply for a student credit card but let us look at the brighter side of it. A credit card can help a student learn the true meaning of being responsible but let us not forget that many others who suffered bad credit because of incorrect credit card use. Bear in mind that how you handle your account can affect your credit history.

For parents, the new Law can indeed be a welcome change as the changes impose a reasonable limit to young credit cardholders without depriving them of their right to build up an early credit history.

About the Author

Samantha Wilson is a consultant for credit cards for students. For years she has written student credit cards articles that would help build student credit.
Copyright 2009

Ease and safety. Using a credit card is a much safer mode of payment for youngsters compared to bringing cash. In case the card is stolen, the student can simply call up the bank and have the account frozen.

Know where the money went. You should also keep track on how your kids use their credit cards. How can this be possible without being too intrusive? Speak with your kids and encourage them to review their monthly billing statements with you. It’s only fair enough especially if you agree to help them with repayment.

For emergency purposes. A credit card for student will surely come in handy during times of emergencies. When cash is not available on hand, important bills or purchases can be paid off through a credit card.

Building credit history. Building early credit history is one of the most important advantages of having a credit card in college. Remember that this is the only time you can apply for an unsecured card without credit history. When you graduate, having good credit rating will definitely work to your advantage.

Money management skills. Another wonderful benefit of having a college credit card is to hone young people’s money management skills. As parents you can give them proper guidance by allowing them to take responsibility over their credit card expenses.

Parents – Do Your Part The guidance of parents is truly important. Help your kids from choosing the right college credit card, to understanding their issuer’s Terms and Conditions, and giving advice on how to manage their accounts more effectively.

Having the first hand experience of managing a real credit card account is a great preparation for a young person who’s about to enter the corporate world. Talk to your kids about the importance of keeping their credit history in good shape, as it will prove to be a major advantage after their college graduation.

But are college credit cardsto blame for the growing number of bad credit and bankruptcy victims? Are credit cards for students really a threat to the economy.

Are Credit Cards for Students Threatening the Economy?

Getting a credit card while in college is recommended to help young people build early credit. However, some students get a credit card for the purpose of using it to finance their college education.

Nevertheless, student credit cards are meant to provide short term financial support. A college credit card can come in handy when unexpected expenses arise. But along its advantages, there are also risks involved that young people needs to be aware of.

Credit cardholders must use their cards only for important purchases. More importantly, it is crucial to pay off balances in full each month to avoid the interest rates and the risk of debt build-up.

Unfortunately, a lot of cardholders are guilty of not submitting payments on time. Many cardholders choose to carry over their charges from month to month rather than pay off the entire balance. Obviously, such a habit puts anyone at a greater risk of bad credit. Whether you are a student or an adult, if you are not consistent with your credit card payments, you could be in big trouble.

Why Students Need Credit Cards

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Student credit cards are great tools for establishing credit history. Lenders, insurers, landlords and employers all use credit reports to check an individual’s background and credit worthiness.

Credit card companies also require good to excellent credit. Those who enjoy an outstanding credit rating are given the best interest rates, higher limit and better privileges.

Clearly, every student who owns a credit card needs to be smart about handling it. Bear in mind that when used correctly, it can work to your advantage. On the other hand, when used carelessly, it can lead to a serious bad credit situation.

About the Author

Samantha Wilson is a consultant for credit cards for students. For years she has written student credit cards articles that would help build student credit.
Copyright 2009

Below is a guide that you can use before signing up for a student rewards credit card:

Which Type of Reward Suits Me? Reward programs vary from – Cash Back, Gas Rewards, Travel Rewards, and more. No matter how attractive the reward program may seem to be, you want to consider if it matches with your spending and lifestyle.

For instance, a lot of people are attracted to Frequent Flyer Miles credit card because they want to get the chance to fly for free. However, if you are an occasional spender, it can take you a very long time to get the free flight. If the card imposes a blackout date, you may not even get rewarded at all.

Matching a student reward credit card with your lifestyle is the key to enjoying the incentives it offers. Instead of focusing on the possibility of getting reward, be more realistic, and think about how you can benefit from your reward credit card without waiting for a very long time.

Check the annual fee. Obviously, credit cards with expensive annual fees defeat your purpose of getting a reward credit card. The cost of annual fees can offset the value of rewards you can earn. The best credit cards for students are those that carry zero annual fee.

Check if the card offers credit reporting. One important service that you must not fail to check is credit reporting provision. See to it that your payments will be reported to the major credit bureaus as it is the only way you can build your credit history.

Grab a good introductory deal. It’s great to choose a student credit card with 0% introductory APR. However, you want to make sure that the interest rate will still be reasonable when the introductory period expires.

Reasonable interest rate. The best way to reduce the risk of bad debt is to go with a low rate credit card. If you can’t pay your monthly charges in full, then perhaps you should choose a non-rewards student credit card.

Take note that credit cards with rewards have much higher interest rates than their non-reward counterparts. If you keep carrying over your balance from month to month, you can easily fall in the debt trap.

If you can keep up with your repayment obligations, then you should be able to maintain good credit standing. On the other hand, if you are often late in making payments or if you usually exceed your credit limit, you may end up with bad credit.

Listed below are smart tips on how you can spend with your student credit card while avoiding bad debt.

Pay your monthly bills in full. Paying off your monthly balance in full is the best way to be free from the interest rates and additional charges. Avoid charging expenses to your card that will be difficult for you to back at once.

Monitor your own spending. Almost all credit cards today provide an online account access features. That means you can check your account at anytime, anywhere there is internet access. Use this important feature to keep track of your charges and payments as well.

If you notice unfamiliar charges or unauthorized transactions in your account, do not hesitate to dispute them to your credit card issuer. Before signing up for a student credit card, understand your issuer’s terms regarding disputes.

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Report a stolen or misplaced card immediately. If your student credit card has been misplaced or stolen, call your issuer right away to prevent unauthorized charges.

Always plan your purchases. It is easy to shop around with a credit card. However, it is wise to plan your purchases ahead of time before going to the mall or supermarket. If you see an item on sale, it can be tempting to use your card to buy but if it was not in your list, fight the temptation to make the purchase.

Do not get more than one student credit card. Having many credit cards in your wallet can be risky because you may be tempted to buy more than what you need. One student credit card is enough for you to build your credit history. Reduce the risk of overspending by sticking to just one card.

About the Author

Samantha Wilson is a consultant for credit cards for students. For years she has written student credit cards articles that would help build student credit.
Copyright 2009

In this article, let’s talk about college loans provided by the government and loans provided by private lending companies.

Student Loans Funded by the Government

Federal student loans are classified in two main categories- Stafford federal loan and Parent PLUS loans. Stafford loans are offered for students who can’t afford schooling on their own while PLUS loans are especially offered for parents who have that are dependents about to enter college.

There are income qualifications to be eligible for the subsidized Stafford loans. A subsidized loan frees up the borrower from paying the interest rate of the loan. Meanwhile, unsubsidized Stafford loans are available for anyone with good credit history. If you are going to apply for an unsubsidized loan, you will pay the additional interest charges.

Student Loans from Private Lenders

What about student loans from Private or commercial lenders? As can be expected, these loans have higher rates than Federal loans. However, it is generally easier to acquire them because of the more lenient standards.

You can choose to acquire more than one student loan. In fact, borrowers can apply for a Federal loan and Private student loan at the same time. However, if you plan to take out multiple college loans from different lenders, it is recommended that you consolidated your loan for easier payments.

Consolidating your loans can reduce your monthly costs because you only have to pay a single rate of interest. It also eliminates the confusion of beating different deadlines of payment. However, before signing up for consolidation, see to it that you only borrow the right amount of loan you need for your education.

As soon as you student loan is granted, utilize your funds wisely. If you can, try to pay off the interest rate of your loan while you’re still in college. By paying off your debts one step at a time, you can graduate with less amount of debts in your account.

About the Author

Samantha Wilson is a consultant for credit cards for students. For years she has written student credit cards articles that would help build student credit.
Copyright 2009

Get a department store or gas station credit card.

A lot of department stores offer credit cards that can be used for purchases. Since there is no credit check, anyone can get approved instantly. Gas stations also offer gas credit cards to their frequent customers and if you drive a car, you can easily get one. Like a department store card, no credit check is need so you can get approved right away.

Department store cards and gas station cards are quite similar to credit cards, in the sense that it allows the cardholder to purchase in advance and pay at a later date. Usually, the cardholder is given at least a month or 30 days to pay back the balance. However, unlike a credit card that allows you to submit minimum payments, store cards and gas station cards strictly require full payment on your due date.

Make sure that the issuer provides credit reporting service. Remember that the only way you can establish credit history is if your payments are reported to the major credit bureaus. To maintain good credit, charge only affordable purchases to your store cards and be sure to submit your payments on time.

Apply for a student credit card.

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Student credit cards are exclusively offered for students. Regular credit cards require good credit and secured credit cards require cash deposit. The only time you can get approved for a student credit card is while you’re still in high school or college. While standard credit card companies require a co-signer for young cardholders, you can get approved for a student credit card without a co-signer.

Find a student credit card issuer that will report your payments to the major credit bureaus. Credit cards do give you the option to carry over your balances and pay only the minimum due but if you want to avoid bad debt, it’s best to pay off your full balance each month. Through full payment, you can avoid the interest rate costs and you can be sure that your credit history will be free from negative marks.

About the Author

Samantha Wilson is a consultant for credit cards for students. For years she has written student credit cards articles that would help build student credit.
Copyright 2009

The Federal Student Loans
Both undergraduates and graduate students can apply for a Perkins Loan for financial support. On the other hand, Stafford loans and Parent PLUS loans are offered for undergraduates and students who are just about to enter college.

Federal student loans have lower interest rates than student loans offered by commercial lenders. Stafford loans have a fixed rate of 8.5 % rate while Parent PLUS loans have a lower fixed-rate of 7.9%. It is interesting to note that all federal loans for students have a fixed or permanent rate of interest.

Subsidized and Unsubsidized Loans
A Stafford loan can either be subsidized or unsubsidized. A subsidized loan frees the borrower from paying the additional interest. As long as the student is in school, he/she is exempted from paying the interest rate of the loan. However, this type of loan is only available for students from low income families.

Unsubsidized loans are open for everyone. The borrower will pay the interest rate of the loan, which is still cheaper than the cost of private student loans. The student can start repaying the loan after college graduation or if the students decides to quit schooling.

Federal Stafford Loans provide 6 months of grace period while Federal Perkins Loans provide up to nine months of grace period. The Parent PLUS loans are offered for parents who have dependents pursuing college. Nevertheless, there is no grace period provided. As soon as the funds have been provided, the parent is required to start with the repayment right away.

Pay Attention to Your Repayment

Untimely submission of payments can still pose a problem for borrowers of Federal student loans. Despite the lower rates, you can still get stuck in bad debt if you do not pay attention to your payments.

Bear in mind that the government will still require you to pay back the loan. In case of default, repayment will be automatically taken through salary deduction. You may also be disqualified from enjoying certain privileges such as tax refunds or tax deductions. In a worst case, a legal case can filed against you which can badly affect your credit history and reputation.

About the Author

Samantha Wilson is a consultant for credit cards for students. For years she has written student credit cards articles that would help build student credit.
Copyright 2009