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Thursday, April 8, 2010

Use a Student Credit Card to Build Good Credit History

Credit cards have become a necessity for most people. However, people without a credit history may not get the best deals to own a card with the best rate. But, many banks will offer credit cards to high school and college students in the interest to help them to establish credit. Therefore, if you are a high school/college student who is interested in building a good credit history can use the advantages of student credit card to meet the purpose.

Most student credit cards need a co-signer, such as a parent or guardian to secure the card just in case the students fail to make their payments. Moreover, the student credit cards have lower spending limit and higher interest rate (known as APR) than the standard cards. But, it is a good option to use these cards as a starting point to build credit history since this type of card is easier to be approved comparing to the standard card.

Credit card is one of the root causes for many debt problems. If you don't use it carefully, your goal of establishing good credit score may not be achieved; instead, you may be trapped into a debt problem. So, before you go and apply for a card, make sure you understand the debt game: what you have spent by swiping the card, you have to pay back in full on time; if not, interest will be incurred and snowballed until you pay it off. So, you have to promise to yourself to use the card responsibly and make payment in full and on-time every month.

Once you have received the first student credit card, you can start the journey to build your credit history, but don't let it becomes your spending habit to purchase cashless. You have to learn how to handle your finance responsibly. Don't swipe the card if you don't have the money to pay for the item you are interested in buying. For example, you want to buy a digital camera that costs you 200 dollars, and you have the cash to buy it. But, you want to build a credit history with your student credit card, so you make purchase with credit and reserve the money to make payment when the credit card statement arrives. On the other hand, if you just have $100 cash in hand, buying a 200 dollar digital camera will create $100 debt that may need to bring forward with interest if you don't have enough money to pay it off when the monthly statement arrives.

The convenient of cashless purchase may causes you change your spending habit to preferably using the card to buy things that you usually purchase with cash. So, if you don't have a habit to reserve the money for payment once you have swiped the card, you may have no enough money to pay the credit card balance in full every month. You are risking yourself to jeopardize your credit worthiness instead of building a good credit using the card. Student credit card can be used to build good credit history for yourself so that you have high credit score and enjoy the best deals in the future when you need the credit to purchase your assets such as home and car. It can also cause you to have bad credit if you don't use it responsibly. Keep this in mind and keep remind yourself that your goal of owning a student credit card is to build a good credit history.


Banks offer student credit cards for high school/college students with the interest to help them build their credit history. If you are in the group, it is a good option to use it to build a good credit history for future benefits.

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