College Students & Credit Cards

College students are targeted by credit card companies!
Multiple applications or actual credit cards arrive in their mailboxes weekly. Since college students are typically strapped for money, just signing on the dotted line and getting credit is such a strong temptation that far too often common sense just fly’s out the window.

Many students do not have a steady income giving them the ability to make payments or consistent payments while in school. They graduate with enormous debt and poor credit. It has been documented that thousands of college students graduate each year with credit card debt upwards of $10,0000.

Be wary of teaser lines, read the fine print.

Credit cards can also be used as a tool for building higher credit scores.
If you are always on time with your payments and financially savvy enough not to max out your cards,
you should request a credit limit increase every 6 months. Your Preferred Mortgage Professional can explain to you in detail how higher limits with low balances can put you ahead of the game.

Read the fine print on the back of the credit card application. What you should be looking for:
Initial credit limit
One time activation fees
Annual fees
Introductory interest rate and how long it lasts
Change in rate after introductory period ends
Difference in interest rate charges on purchases and cash withdrawals
Increase in interest rate if late on a payment
Grace period
How a late payment will effect any other credit cards you have. (parent company & affiliate cards)

Investigate your options before deciding to open too many credit cards, if you are a college or university student. Many financing and student loans are available with much lower, or even diverted payment schedules.

If you decide you would like to open a credit card for credit-building purposes, consider getting a secured credit card.

If you have trouble obtaining a credit card, you can apply for a small personal loan at your bank. You can get a loan for $500 or $1,000 and leave the money in an account and ask you bank to automatically withdraw the money for you on a monthly basis. This way you will know that the money is in the account, and the payments will be made on time. This is always a good option if you are having trouble receiving a credit card, and it can be cheaper than obtaining some credit cards.

Try not to apply for every credit card you see at the University bookstore, in the student union, anywhere else on campus, at concerts, at sporting events, the malls and anywhere else you see them offering a free gift with a credit card application. By always applying for credit and having numerous credit inquiries all of the time this can harm your credit scores. Also, having too many credit accounts has the ability to negatively impact your credit also.

Many parents will refinance and use the equity to payoff there childrens credit cards after a college graduation. Often its done as a reward and a way to give the child a fresh start.

» DISCLAIMER: The information contained in this article on 'College Students & Credit Cards' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.