The casual use of credit cards and the aggressive marketing of credit card companies were two facts of life before the financial crisis a few years ago brought a completely new reality to finance. The huge rise in unemployment led to many people defaulting on their financial responsibilities and often it was the credit card companies who found themselves with a number of clients unable to repay their outstanding balances as things tightened up.
The result was that credit card users often found themselves with poor credit scores and credit card companies adopted a far more conservative approach to the issuing of their cards. While the economy was buoyant credit card companies charged high interest rates on the balances outstanding at the end of the month. Users who were employed and happily seeing the value of their real estate rising often did not take much notice of the core credit card debt they were building up or adopted zero per cent interest rate offers from other cards without looking too closely at the small print.
When the crash came there was trouble and with economic growth remaining stagnant the impact on families is still being felt.
That said the next generation of consumers, the students setting out on college courses should look for the best credit card options designed particularly for their age group because the sensible use of a credit card will begin to create a good credit score which will be so valuable in later life. In some ways no credit history is just as damning as a bad credit history.
Credit cards have always been extremely convenient and they remain the best way to purchase many things online; travel and car hire are two very good examples. They remain very useful for paying every day bills as well rather than carrying cash and as long as the monthly balance is paid off on demand in full then they are interest free.
The companies regard students as potentially their next generation of clients and so incentives such as rewards on use have been introduced. The first thing to avoid is any card that charges an annual fee. There are cards specifically designed for students that offer cash backs and these are the ones to investigate more closely.
Discover Financial’s Student Card falls into this category offering cash back incentives on different expenditure per quarter on a rotating basis. There is a 0.25% cash back on the first $3000 of purchases annually and 1% thereafter.
Discover’s Open Road Card has 2% cash backs on the first $250 spent each month in certain outlets, 0.25% up to $3000 spent in general and 1% after that.
Capital One’s Journey gives 1% cash back on all purchases and an additional bonus on that as long as the bills are paid on time.
Citi Forward Card gives points against dollars spent in restaurants, book stores, record stores, theaters etc., with bonus points for staying within your credit limit and paying the balance on time. There is also an interest free period of 7 months before an APR of between 13.99 – 22.99% is charged.
Citi’s Dividend Platinum earns 5% cash back for six months on purchases in some retailers and further cash backs on rotating expenditure which is fully explained.
Whichever card a student might decide to take the important thing is to pay the outstanding balance on time each month; not only to avoid getting into debt that cannot be managed but also to begin to create a good credit score for future life after studying is finished. There are few dangers if a student reads the terms and conditions, fully understands them, and pays up on time.