Student Credit Cards

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Benefits of Student Credit Cards

When you become a student you will find many banks and other financial institutions willing to advance you loans, and bank accounts that come with special terms attached for those who are new students.

These need to be considered very carefully indeed, especially student credit cards, for it is important that you take out what you need in order to get by and do not simply get into debt for the sake of it.

Many banks have a special student credit card deal that features a beneficial rate and these are well worth investigating, but be careful not to be drawn in to taking them on board and then spending the maximum credit believing you are suddenly wealthy. Remember that credit cards have to be paid off, and there can be comprehensive penalties for those that are not taken care of in the given time.

Nevertheless, used well and carefully student credit cards make very useful additions to the student finance armoury, yet it helps to understand how they work. Visit your bank – or student advisor – for more in depth information but the following is a basic outline of how the system is run.

A student credit card is, essentially, a loan. On applying you will be granted a credit limit, this being the maximum amount of debt you can borrow on that card. It is most likely that any card you take out will be supplied to you by the bank that is taking your grant or loan, as they will be assured of getting the money back in a greater way than non-associated banks.

When you borrow on the card – by buying an item at a shop or paying for travel tickets and other items – you are adding to what you owe the credit card provider. There is generally a term that decrees when you need to pay off what you owe, and it is often within a thirty day period.

In general, if a student credit card debt is paid off in full by the end of the payment window – say you borrow on the first of the month and pay it back the day before the first of the next month – you will pay no interest charges. This is the best way to use credit cards, by borrowing the money interest free and paying it back before any charges accrue on the outstanding balance.

However, if you fail to pay the full amount you will be liable for outstanding interest charges – at the agreed rate – on the student credit card balance that is not paid off. There will also be a minimum payment you must make each month – regardless of whether you want to or not – and failing to meet this standard amount can result in very high additional charges on your account.

It may sound daunting, but a well managed student credit card is a bonus. A poorly managed one, in which a large amount is owed and the minimum monthly repayments are not met, can be a crippling debt and one that hangs around for the future. It can also result in poor marks on your credit assessment rating, something that will affect your ability to get a loan in future years.

The best way to handle a credit card is to work out how much you can feasibly pay back each month. If you have a job – and are one of the lucky ones – your student credit card is a great way to get an advance on your end of month wages, but make sure you pay off the amount taken otherwise you will end up costing yourself money. If you use your student credit card just to pay fees then make sure you clear the amount as soon as you receive the student loan or grant that is coming your way to take care of them.

Think of student credit cards as additional sources of money in an emergency rather than an addition to your overall budget, and you will be well placed to manage your account in a sufficient manner to keep the bank manager happy.