Costs for college student credit cards will obviously vary depending on the cardholder and lender, but here at the end of September, students who are looking into credit cards, or parents that maybe in a position where they are considering a student credit card for their child need to be aware of rates that come with this particular line of credit as this will obviously impact costs if student credit cards are not used properly. Understandably, students in college are not able to acquire a credit card as easily as they could in previous times, but there are still options for college students who are looking to use an unsecured line of credit for a variety of purposes, but even this needs to be weighed into the decision of a student or parents to seek out one of these cards.
Currently, we are seeing rates of around 13% to 20% on student credit cards and while these rates may be manageable for some, students need to remember that when they carry a balance this will lead to higher overall costs. It’s because of this that some cardholders in the past have found themselves in a very difficult position when charging up a high amount on their student credit card and potentially being in a position where they cannot pay the minimum payment on what they owe.
Furthermore, students are being urged to consider why they are looking for student credit cards at the present time because debt from student loans has become a huge problem for many students and graduates, so adding more debt obligations on top of loans to credit card use may put some graduates in a difficult financial position, and in some instances, even hurt a graduate’s credit score. If someone who is out of school has debt from student credit cards and student loans, this will obviously be seen poorly by some lenders and potentially reduce their credit score as they have a high amount of debt in relation to the overall amount of credit they have, or they may not have an income that will allow them to easily meet these financial obligations either.
It’s understandable though that some students are using these credit cards to meet certain costs like books, food, or other financial obligations that may not have been covered by a financial aid package, but some students can be drawn into these credit cards due to certain perks that are offered, like offers for cash back, however it needs to be understood that a rigid repayment plan and financial discipline is required on the part of students before they can avoid high amounts of debt or interest rate payments.
Luckily, some young students may be in a position where parents will have to cosign for this particular type of card, and this could help young cardholders to be more accountable and rather than allowing them to have this type of credit and potentially make mistakes that could be quite costly or detrimental to their finances. Obviously, students do need to be aware of the drawbacks that these cards can bring but they may also be beneficial in cases of emergencies, when financial needs arise, or some students simply may be able to handle credit responsibly and, as a result, this will require that students who feel that a student credit card could be helpful for their situation be careful to compare rates, costs, and what will be required of them when using a specific card.