Despite the fact that changes to credit card laws have made it more difficult for lenders to offer unsecured lines of credit to students, there are still a wide range of student credit cards that are available and could be helpful here at the end of June for those who are planning to either enter college for the first time or continue their studies in the fall of 2011. Typically, benefits of student credit cards usually center around helping these young men and women build their credit history early, while they are going to college, as some parents may help their child acquire a credit card to meet certain college costs and, during the semester, help them meet payments on debts from the purchase of books or food.
However, the rates on student credit cards do vary and, here at the end of June, have remained relatively unchanged and are averaging around 13%, but there are advertised rates from a cross-section of these cards that land anywhere in the neighborhood of 20% or more. Obviously, the lender and cosigner for a student credit card will all factor into what rate a college student may receive, but there are also aspects of student credit cards like fees, whether the interest rate will be variable, and any benefits that may be helpful for a student are all qualities of these various cards that must be looked into.
The question of whether student credit cards are a good idea though, has still been raised even though there are protections in place to guard against predatory lending that may have plagued campuses in the past. While there were some credit card companies who did offer student credit card options at affordable rates and as a way to help meet certain costs that arise, there were also lenders that would prompt students to sign up for a credit card by offering free gifts, low introductory rates, and may have been getting students who could not afford or fully understand what using a credit card entailed.
Since parents must have a hand in student credit cards, for the most part, at the present time, there are more responsible students who are able to get these credit cards, rather than just anyone who feels that they can charge up a substantial amount of debt and meet minimum payments, as this led to a great deal of financial strain and excessive interest rate costs for students in the past. Yet, students need to understand that if they acquire a credit card, particularly while they are in school and may not have the income to properly manage a great deal of debt on their card, using this card as a way to simply establish a positive credit history should be their priority, as the misuse of a student credit card will obviously lead to financial struggles throughout college or after graduation.
Purchasing books, food, or clothes can be expenses which might be justified on a student credit card, but students and parents must make sure that the ability to promptly pay off these purchases on a monthly basis will be there, no matter if a student participating in an internship or has a part-time job while in school. Simply making purchases on a student credit card without a stable means to repay this debt will not teach students about proper credit card use, but could also lead to high overall costs thanks to interest rates and could damage to a young credit score.