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Some companies require a parent or guardian to act as a back up
source of payment. The parent is asked to co-sign a student
credit card. The responsibility of the co-signer is to cover any
debts a student may incur if he or she is unable to pay them. In
addition the interest rates on a student credit card can also be
higher as this minimizes the financial risk to the company.
Finally, as few students have established credit ratings, the
spending limit can be significantly lower for a student credit
card. It is usually kept between $500 and $1000. There are also some positive aspects to student credit cards. A
student credit card can establish a good credit rating. A credit
rating is important for anyone who plans to borrow money to
finance a car, a house or, for those more fortunate spenders, a
world cruise. A student credit card, if managed wisely and paid
off regularly, can be a first huge step toward financial
independence. With a solid credit rating, a student's chances of
being approved for a full loan are greatly improved. |
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A student credit card teaches financial responsibility within
reasonable limits. Because the student credit card works like
its adult counterpart, mastering its use can be beneficial to a
student's money managing skills in the future. It will give him
an opportunity to create a budget and stick to it. This is a
necessary financial skill and one that will become a habit if
started early.
As convenient as a student loan may be, there are possible
pitfalls. But if a young person is warned, much can be done to
avoid them. To avoid overspending, creating a budget is probably
the best protection a student can have. A realistic view of the
money coming in and going out is essential. If at all possible,
a student will be wise to stick within the budget limits.
'If you can't afford it, walk away'. This sounds obvious, but a
credit card has a lot of power. That little piece of plastic
gives a young person the immediate means to buy a ticket to a
concert, a new pair of jeans or a fancy dinner for that new
girlfriend. It's easy to think, 'I'll worry about that later'.
Resist! It's better to worry about it now.
A student credit card, when used responsibly in moderation, can
be a huge step toward financial independence. If it is treated
with respect, it will remain a servant instead of the master.
FINDING YOUR STYLE ISN'T EASY, CHOOSING YOUR REWARDS IS.
Every purchase on your card earns you points towards free merchandise
or gift certificates with the Chase Flexible Rewards Card.
When you buy your clothes, gear and tunes why not choose to reward yourself?
Save with low introductory rates, get great cardmember benefits, and establish your credit history
at the same time. Apply Now!
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