Many students find it difficult to apply for car loans or other types of financing because they have little to no credit history.  Graduates often find that getting a mortgage for their first home is a hurdle they cannot overcome because they have a low credit score due to not having much lending in their history.  One way to solve this problem without too much stress is for students to apply for student credit cards.

Student credit cards are credit cards designed for students.  They have rewards programs tailored for students and also have some structures that are necessary due to the low credit rating many students carry.  For instance, some student credit cards have higher interest rates than traditional cards.  This is because the student poses a higher risk to the credit card company.  However, this high interest rate is not dangerous if the card is used correctly.

When shopping for student credit cards, try to find a card that has a low introductory rate period.  Even students can get cards with a 0% interest rate for the first few months.  This is a great way to learn how to use the card responsibly without risking high interest rates if you make a mistake.  Also, consider signing up for a card with a lower credit limit, as this will keep you from overspending on the card and creating a dangerous debt situation.

As you look for student credit cards, be sure to watch out for annual fees or balance transfer fees.  These are expenses that often are added to the card that you can avoid by carefully choosing you card and reading all of the fine print.  Also, look for a rewards program that will earn you merchandise or cash back for the purchases you make on the card.  You might as well make money when you use your credit card!

To use a student credit card to build your credit history, you will need to make periodic charges on that card.  Simply owning a card is not sufficient, because those looking at your credit history want to see that you are responsible enough to pay what you owe on time.  To do this without getting into debt trouble, pick a category in your monthly budget and then only purchase that item with the card.  For instance, purchase all of your gasoline each month on your credit card.  Avoid making other purchases on the card, and pay off your balance in full each month.  This will boost your credit rating without adding debt problems to your life.

admin :: Jan.17.2008 :: Uncategorized :: No Comments »