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What is minimum amount due
Don’t just get happy to see the minimum amount due against your credit card bill, as this is just to provide you a relaxation in short term only. Your interest on due amount will increase in next month. You can get to know about what is minimum amount due in credit cards here.
Types Of Credit Cards
Do you know how many types of credit cards are available? What is your need or requirement to apply for a new credit card? First of all find out your purchasing need and then only apply for the credit card. I think as a student one must look for a free movie tickets, discount on restaurants and reward points on shopping at malls etc benefit in a credit card.
Co-Branded Credit Card
Do you know what is a co-branded credit card? Its very simple, if you want to get exclusive benefits while shopping from Amazon or Flipkart then you can find out a special credit card where Amazon & Bank are providing benefits together. E.g. I am using SBI Yatra Credit Card which is nothing but a co-branded credit card fro SBI.
CVV? What’s That?
The CVV number is a 3-digit number printed on the reverse of your Credit Card, beside the signature panel. You’ll need this to verify online transactions.
What Is An Add-On Credit Card?
It’s a supplementary card that is issued to your family members. An add-on Credit Card is linked to your primary Credit Card account. Be careful about giving add-on cards to your family. You’re responsible for any defaults in payments.
1. Getting too many credit cards
Since the passage of the CARD Act in 2009, credit card companies aren’t permitted to aggressively market to college students anymore. However, this hasn’t stopped many college kids from opening every credit card offer that crosses their path (think retail credit cards, balance transfer cards, etc.).
If you’re just getting started with learning how to manage a credit card, your best bet is to pick a card that suits your needs and stick with that one card for a couple of years. This will give you practice with establishing good credit habits like managing spending, paying bills on time, and staying out of debt without the pressure of having to juggle multiple cards.
Avoid this credit card mistake by invoking a mantra you probably learned in high school – just say no.
» MORE: Getting my first credit card: What every student should know
2. Not tracking spending
Because credit cards are accepted nearly everywhere these days, tracking your spending on a credit card can get a little cumbersome. After all, it’s not like you’re just making a few purchases a week with your plastic – you’re probably making several dozen.
However, failing to keep track of how many purchases you’re putting on your card can lead to big trouble – namely a big bill that you can’t pay off within 30 days. Over time, this could lead to a pretty hefty debt that will be tough to pay off. So don’t fall into this trap; figure out a way (digital or analog) to keep track of how much you’re spending so that you don’t go overboard.
3. Forgetting about the bills
College is a really busy time – you’re going to class, working, spending time with friends. It’s easy to let the little details slip your mind.
But don’t let your credit card bill be one of those details. Failing to pay your credit card bills on time could seriously damage your credit score, and moving into your adult life with less-than-stellar credit is going to make it difficult to get a home or car loan. This is why it’s important to mark your calendar with your credit card bill’s due date and be sure to pay it on time and in full every month. Your future self will thank you for being so responsible!
4. Adopting an “I’ll pay for it later” attitude
When you’re young and studying hard, it’s easy to envision a future where you’re making tons of cash doing a job you love. This makes it seem sensible to charge up your credit card with things you “need” now. You’ll be able to pay it off later, right?
Not necessarily. Recent college graduates have had a tough time landing jobs, so don’t assume you’ll immediately transition into a career that’s well-paying enough to tackle all your bills and a huge credit card debt. The best thing to do is spend responsibly with your card – only charge what you’ll be able to pay off within a month, no matter how much of a big shot you’re sure you’ll turn out to be.
5. Avoiding credit cards altogether
With all the traps and tricks that credit cards put in our paths, it might be tempting to just avoid getting a credit card altogether. But if you take this approach, you probably won’t be doing yourself any favors. Fifteen percent of your credit score is determined by the length of your credit history, so it’s crucial to start building that history right away. As soon as you’re able to qualify for a credit card, get one and use it responsibly.
The bottom line: Not all lessons need to be learned the hard way. Use the tips above to avoid common credit card mistakes!
1. Credit cards help establish credit history.
A credit card is a simple tool to both establish credit history and begin working toward a good credit score.
Student loans help establish credit and can positively impact a credit score. However, part of the FICO scoring model depends on diversity of credit. And responsible use of a credit card – making on-time payments, for example – is a simple way to increase a credit score.
Credit cards also offer students without loans the opportunity to establish their credit and spend four years proving they are responsible borrowers before graduation. Lest we forget, recent grads who don’t want to return to their parents’ basement will need a credit score to get their own apartment or house.
Parents concerned their child can't handle the credit limit associated with a credit card should consider having their child apply for a secured card to prove their responsibility before upgrading to the real McCoy.
2. Students don’t always have cash.
Certain financial experts advise using cash to avoid debt because mindlessly swiping plastic doesn’t register as spending money. Except cash is quickly becoming a relic of the past, and college students aren’t likely to be dealing with paper currency.
Plenty of young men and women are already used to debit cards and use apps like PayPal or Venmo to pay back a friend instead of cutting a check or getting cash out at the ATM. If students don’t have quick access to an ATM on campus, a credit card will save them if they’re in a bind.
3. Online purchases shouldn’t be made with a debit card.
Who buys textbooks at the university bookstore anymore? College students today were reared making purchases on Amazon and buying their clothes online. They don’t even need to pick up the phone to order food.
Unfortunately, the rise of technology also led to an increase in fraud and identity theft.
Using a debit card for online purchases makes an individual far more vulnerable than using a credit card. If a thief gets a hold of a debit card, he or she can effectively drain a bank account instead of just racking up fraudulent charges on a credit card. Most banks or credit card companies do not hold individuals liable for fraudulent purchases on credit cards. According to USA.gov, consumers are only liable for $50 if the loss is reported within two business days, but the charge could go up to $500 between day three and 60.
The use of a credit card for online shopping, buying gas or making purchases at other places known for skimmers, could help a college student avoid the headache of a mysterious drain on his or her bank account.
Who shouldn’t get a credit card?
College students who can’t even remember their homework assignments aren’t ideal credit card users. Young men and women who describe themselves as impulsive, spenders or forgetful may need to wait before acquiring a potential debt tool.
To avoid credit card debt and protect their credit scores, young adults need to be vigilant about paying their bills on time and in full. Credit card users should understand the ramifications of carrying a balance and paying interest on their debt. A credit card shouldn’t be used any differently than a debit card, except you have to pay your bill at the end of the month instead of automatically seeing the money get deducted from your account.
The decision whether or not to apply for a credit card should be made based on self-awareness and fiscal responsibility. It takes a basic level of financial education to understand how credit cards work, the interest rates that get charged on debt and how easy it is to get trapped in a cycle of throwing money toward interest. But for responsible, independent college students, a credit card can help establish their financial footing.
June 12, 2016 10:07 p.m. ET
Going off to college comes with newfound financial freedoms. And for many college students that means their first foray into the world of credit and debt. There is no shortage of credit-card offers on and off campus, from cards with cash-back rewards to those geared specifically toward students. According to an Experian College Graduate Survey conducted in April, 58% of soon-to-be-graduates surveyed said they had a credit card, while 30% said they had credit-card debt, with an average balance of $2,573.
Many people argue that having a credit card allows students to learn to manage a debt load and the responsibility of paying bills on time. And, for some parents, credit cards provide a convenient way for their children to buy things while they are away at school without having to reach out every time they need funds for a purchase.
But others say giving a credit card to a college student with little personal-finance know-how is a recipe for a debt disaster. That’s especially true since many graduates already are leaving college over-burdened by student loans, the critics say. YES: It’s the best time for people to learn how to manage finances
By Beverly Harzog
Credit cards have a dark side if used irresponsibly. But responsible use during college—with supervision and training from parents—can help give young adults a financial head start on postgraduation life.
For one thing, letting your child have a card means you have the chance to teach them the skills they need to use it. Once your child graduates, you’ll lose influence over their decisions. It’s the natural order of things. That’s why you need to seize the opportunity to offer financial guidance and help secure a good financial future. When your child becomes a confident and responsible user of credit, paying the credit-card bill on time and staying out of debt become a lifelong habit.
An early start
There are other benefits to starting down the credit path early on. Learning how to handle credit mistakes during college is much safer—and usually cheaper—than after graduation, when graduates may be facing student debt and may be tempted to sign up for cards with higher credit limits. It’s important they get a lesson in compound interest and controlling their spending before that happens.
Getting a card in college is also an opportunity to teach children how the FICO score is connected to their credit habits. Great habits lead to a great score. If they make a mistake, they’ll learn the consequences of that, too. And, since boosting your FICO score takes time, it’s crucial to get an early start.
That leads to a broader point: The transition to adulthood is smoother and less costly when the graduate already has a good credit history in place. Good credit leads to lower deposits for an apartment and for turning on utilities. It also results in lower premiums for health insurance and car insurance. And it helps graduates land that first job, as more employers are looking at credit history.
Another reason for a credit card? College students often need to buy textbooks and other school-related items online. Credit cards come with better consumer protections and, in many cases, zero liability in case of fraud.
Likewise, you might not be there every time your child calls or texts you from college. There might be unexpected expenses, such as car repairs or a medical crisis. Having a credit card ensures that your child is covered financially and can get help when needed.
Involvement is crucial
I completely agree with critics about the risks of credit-card use. I made plenty of mistakes myself as a young adult—because I didn’t have training in how to use credit. I also agree that colleges pushing cards on students is a problem and must be controlled.
Everything I say is based on parental involvement. Once your children have cards, the real work begins. You can’t take a hands-off approach. Stress that credit is dangerous if used irresponsibly. But also teach them that good credit is a financial tool that will help them save money throughout their lives. Empowerment is the answer, not avoidance.
Ms. Harzog is a consumer-credit expert and author, most recently, of “The Debt Escape Plan: How to Free Yourself From Credit Card Balances, Boost Your Credit Score, and Live Debt-Free.” She can be reached at email@example.com.
NO: Too many end college with high debt and poor credit scores
By Robert D. Manning
As a researcher on credit cards for over 20 years, I have seen the enormous toll that consumer debt creates for college students.
They often make impulsive purchases without understanding long-term consequences: alcohol, expensive gifts, lavish vacations, casino gambling, costly electronics and much more.
A lingering problem
Then, after graduation, they learn the reality of their indulgence. They must make major sacrifices to pay credit-card debt and student loans each month. They are saddled with low credit scores that may deny them the ability to rent an apartment, obtain loans for graduate school or qualify for a mortgage. They may even lose a job if an employer has concerns with their debt load and payment history.
Parents, too, may face consequences. Credit-card companies have shifted from requiring parental co-signatures to granting accounts directly to students under 21—and then suing parents for the unpaid balances.
Some will say that denying students credit cards goes too far. Parents, the argument goes, can supervise their children’s card use and teach them financial responsibility that will help them build a good credit track record and serve them through the rest of their lives.
Yet when children begin college, parents have effectively ceded control over their daily financial decisions. College students are more heavily influenced by peers and mass-marketing campaigns, my research has found.
I have also found that students have learned tricks to keep parents in the dark on their spending. For one, they use credit cards co-signed by parents for approved purchases, then get other credit cards for purchases they don’t want their parents to know about.
There’s also the bad influence of colleges themselves to consider. Before the financial crisis of 2007-08, credit cards were provided to students like candy. Schools routinely signed multimillion-dollar exclusive marketing agreements—and were incentivized to promote card use without disclosing terms and costs. The dearth of financial-education classes and workshops on campus created a perfect storm for competitive consumption.
Federal regulations and advances in payment systems (including debit and prepaid cards) have improved students’ use of credit. But colleges still push cards, and misuse of them remains a serious problem—especially in the absence of effective financial education.
Keep it simple
Beyond that, there are many opportunities for a student to build a good financial track record without a credit card. For one, students could simply pay for their expenses with cash. Students are much more likely to pick up good habits by exhausting their checking and savings accounts and then learning how to budget on their limited financial resources. Ultimately, it is about learning practical skills that help students make prudent decisions. After all, isn’t that what college is all about?
Dr. Manning, the author of “Credit Card Nation” and “Living With Debt,” is senior research fellow at the Institute for Higher Education Law and Governance at the University of Houston Law School. He can be reached at firstname.lastname@example.org.