There is often a craze among students, when it comes to acquiring student credit cards. No matter how convenient and easy you find it to operate, it is necessary to know how to use a credit card the right way avoiding its overuse.
According to studies, many students are left with unresolved dues after completing their graduation. This is probably due to credit card overuse, which attracts debt to their account.
What Industry Experts Say?
According to financial experts, credit card issuers look upon students as potential market, even though they know students are unemployed individuals. As a student, you spend much not only on fulfilling your academic wants, but also on various other things. Credit card issuers know this well. They even know students are not capable of paying off their debts in one go. As such, the issuers levy additional charges such as the penalties against late payments, annual fees, high rate of interest and penalties for crossing the credit limit.
Student credit cards help students to build their own credit history, if used smartly and properly. Hence, you need to know the correct use of such cards. Whichever transaction you do with your student credit card, it will surely reflect on your credit report. It affects the credit score, which is normally denoted by points system. If you are a late payer or miss on the payments or cross the credit limit, it is bound to affect the credit score negatively. A careful credit card user sees to it that all the payments are paid on time to maintain the good credit status.
It is necessary to maintain a positive credit score, so that in future, if you apply for loans with creditors, they get a fair idea of your transactions. They do this by referring to your credit report. After graduating from college, students have to prove their creditworthiness and this is evident through the credit report itself. Before accepting your applications, credit lending companies, landlords, governmental institutions, employers and insurance companies will peep into the credit report you possess.
A nice move
To maintain a good credit score, a nice move is to discharge all the monthly balances on time as they arrive. Avoid spending on unnecessary items. Instead, use student credit cards only on making important purchases such as books and groceries. Keep away from using credit cards, while dining out. Likewise, while making purchases, consider the repayment options first. Even before you purchase, decide over the payment strategy and the source of income for repayment.
If you pay your monthly payments at the right time, you save yourself from paying extra charges such as interest and late fees. Further, your creditworthiness remains unharmed. It is up to the students for how they manage the credit scores on their credit reports.
Student credit cards are indeed worth the investment. Through proper education over their use in terms of security, students may derive as many benefits from these cards.