Obviously, when it comes to student credit cards many current students are in the position where if they want a credit card for college it will be necessary to either prove that they have the income to meet these obligations that come with using an unsecured line of credit or parents will have to cosign for a student credit card, which is something that parents have done not only this year but in the past as well. A student credit card can be helpful for certain expenses, like books, food, or simply in the case of an emergency, but when it comes to parents cosigning for these cards or taking responsibility for paying the charges that a student may acquire, there are different techniques that these parents have used to keep their interest payments low.
It goes without saying that parents need to comparison shop when they feel a student credit card will be in the best interest of their child, but also educate young men and women who may be off to college for the first time or who are still quite young, as the CARD Act will not allow students under 21 to get the card alone in most cases. Yet, with current rates on student credit cards averaging, on the low end, around 13%, some rates may be 20% or higher depending on the financial situation of the borrower. Understandably, banks have taken on a great deal of risk when lending to college students due to the fact that some simply do not fully appreciate interest rate payments or how to spend within their means, and if apparent cosigns on one of these cards it can negatively impact their financial life if a student cannot manage their purchases and repayments.
It’s because of this that some parents opt for secured credit cards, which have a set limit that is backed up by a savings account, or some parents may only allow students to have a debit card associated with a checking account, yet even in instances where parents have allowed students to get an unsecured credit card, they may want to make sure that they get the best rate possible and pay off the total amount of expenses on a monthly basis, or when their credit card bill arrives. This is a simple repayment method that is common sense among many consumers and will obviously work to the advantage of parents who have cosigned for their student’s credit card.
Some parents will allow students to acquire one of these cards, by cosigning for them, as a way to teach responsible money management, help them to begin the process of building their credit history and score, but again there are some students who only have these cards for cases where a financial emergency arises. However, parents are often urged to take caution when allowing their son or daughter to access an unsecured line of credit, as some students in the past have maxed out these cards, been overwhelmed with interest rates and repayment obligations, and have done damage to this credit score early.
While these cards can be useful for some, here in September when parents may be looking into what offers are currently available it should be remembered that parents need to make sure they set an affordable limit for themselves, work to get the most affordable rate they can, and many parents often require that their student share responsibility and it comes to repaying charges on this credit card, but even if a parent wants to be able to help their child financially by paying off this card themselves, parents are often advised to set limits and, once again, make sure that they have the money set aside or the income that will allow them to easily meet any charges in total so that they can keep the interest rate costs on this card to a minimum.