Thursday, 7 June 2012

Low Interest Student Credit Cards

Parents have enough stress with their kids heading into high school and college, worry about their low interest student credit cards should be one of them. When it's time for your kids to move out and be away for college, you want them to have access to money, but it's on both the parents and the child to make sure they are responsible when it comes to using credit cards.

A lot of families and college students can get into financial trouble quickly if they are not actively watching their financial statements and billing transactions. This article will go into detail on where you need to focus your efforts to make sure you don't make the same mistakes others have made.

Student & Parent Responsibility is Key

It's not as easy as just signing up for a low interest student credit card then getting approved. Most time there will be a credit report on your history and sometimes a parent signature will even be required. The bottom line is, companies want to give you their credit card, but they have to make sure it makes financial sense for them first. What you do with the card and how you spend your money is not only the responsibility of the card holder, but also anyone who has co-signed on the account.

Low Interest Intro Rates

Credit companies make their money off interest. When you see a 0-2% interest rate, it's usually just to get people in. After a short period of time, or after missing a payment, you could see your interest rate hike all the way up to 25%. These high rates are not rare in these economic times and you must be aware of the fine print before signing up for a card.

What You Need to Know about Low Interest Student Credit Cards

# Too Much Spending Will Put You in Debt

One of the biggest problems with having your own cards, is how easy it is for card holders to get into a bad financial situation. When you have a credit card, you don't think of it as cash, and if it's a students first credit card, they may be spending too often and without caution.

A purchase of $1000 placed on a credit card with an interest rate of 18% can quickly build up. If the student only pays the $25 a month minimum towards the card, then end payment for that $1000 purchase will be around $1115, which is an extra $115.

# Student Debt is a Serious Issue

It's easy to fall into marketing campaigns and a consumer traps. Many promotions will have free shirts, very low intro rates and fun college students handing out applications. Some card promotions may even approve you on the spot. These are the type of cards you have to look out for. Remember to always read the fine print and keep your spending to a minimum.

Having a student credit card will build up your credit, but be careful not to build up your debt at the same time.

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