Key Points Concerning Student Credit Cards

If you are a young person who owns a student credit card or are planning to apply for one, this article was written just for you. Check out the following key points about students and their first credit card:

Credit card companies love students. For credit card companies, high school and college students are two important niches. By becoming their first credit card, students are more likely to stay with the same issuer even after their college years.

To attract young people, many issuers offer freebies (shirts, caps, CDs, mugs, gift certificates, etc.) as part of their marketing strategy. However, the New Credit CARD law prohibits credit card companies from distributing flyers or setting up application booths within 1,000 feet of school campuses. The new law aims to discourage young people from signing up for a credit card without doing research or reading the Terms & Conditions.

Understanding credit scores. Yes, a young person can establish his/her credit history by applying for a student credit card. Indeed, this is the only opportunity to get approved for an unsecured credit card without credit history.

However, teenagers need to understand how the FICO scoring system works. For example, the FICO score is calculated based on different categories and one is payment history (35%). In order to build a solid credit foundation, students must be able to consistently keep up with timely credit card payments.

Furthermore, not all issuers of student credit cards offer credit reporting service. To build your personal credit, make sure that your chosen student credit card will report your payments to the major credit bureaus (TransUnion, Equifax, Experian).

Interest rates, fees, terms and conditions. Before signing up your credit card application, check the interest rates, fees, as well as the policies of your chosen issuer. In comparing student credit cards, do not just focus your attention on the APR or the interest rate. Instead, pay attention to the smallest details to make sure that you will be making the right choice.

Since it will be your first credit card, it is recommended to ask for assistance from your parent or guardian or a friend who has good credit history. If there are terms in the Agreement that you do not understand, do your homework or ask for help.

About the Author

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

Copyright 2010

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