College graduates have, in some cases, found that getting a line of credit may be difficult, particularly for those who have little credit history upon graduation, as there are more graduates who are saying that, thanks to other debts that may be in their life or struggles with debt they have seen in the lives of friends and family, living debt-free, particularly in the area of credit cards, is the best way to go. Yet, graduates may find that, while credit cards are not necessarily vital, they are one way that can be used to build a better credit history, improve a credit score, and student may potentially use their positive credit rating to get lower rates in the future on lines of credit like a mortgage or car loan.
Understandably, it will depend on a student’s financial situation as to how difficult credit may be to acquire but there are some students who are turning to student credit cards as a way to begin the process of establishing their credit history and building a positive credit rating for later in life. Yet, it needs to be understood that students will have hurdles which they must jump when applying for student credit cards thanks to the CARD Act implementing rules that make it harder for some students to get a card in the hopes of keeping excessive amounts of debt or credit card misuse to a minimum.
Yet, students are currently seeing, here in July, average rates on student credit cards of around 13%, with some variable APR’s on cards ranging anywhere from 13.99% to 21.99% or more. Also, before students may be able to take advantage of the most affordable student credit card option they can, a cosigner may be required or a student will have to prove that they are in a financial position that will allow them to repay any charges they make on their card, and this could require that a student have a part-time job for example.
Students can still use a secured credit card to begin the process of establishing credit, but what needs to be remembered by both parents and student borrowers is that a credit card that is acquired during college should be used for the purposes of establishing a credit score and not necessarily to make frivolous purchases. Understandably there are some students who are able to acquire a credit card and use these cards as a way to either purchase food, books, or other necessities but keeping an eye on the total amount a student charges each month will be vital as carrying a balance will cause these overall credit card costs to increase.
Also, students may want to not only compare credit cards from major lenders but look at credit unions or small community banks that may be in the area or with which their parents may be affiliated as these options could potentially not only bring in more affordability, in terms of the credit card interest rate they receive, but some of these institutions may be able to help students better understand the responsibilities of using an unsecured credit card.