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Credit Cards 101 for Students

So you learned in your online credit card research the best way for students to establish credit is to get a credit card in your name, make purchases and then keep up the payments.

Author: Mykidsinheritance

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So you learned in your online credit card research the best way for students to establish credit is to get a credit card in your name, make purchases and then keep up the payments.

Applying for that first credit card is surprisingly, almost ridiculously, easy. You complete an online application, you click to submit your application, and in a few minutes, thanks to instant online approval, you become the proud owner of a brand new credit.

You do still have to wait for the actual credit card to be delivered by mail, but when it arrives you really feel like…well, an adult. Sounds really simple, right? You fill out an online application and then you shop. No problem, you can do that. You can think of plenty of things that you may not have been able to get before because you didn’t have the “real” money.

But then the monthly statement arrives. And each month it gets scarier and scarier to open it. How did it go from a proud moment, a passage into adult life, to one you dread each mail delivery?

Let’s say you go out and spend $100 on new clothes for school. You don’t have that much money in cash, but you got some great deals - so you put it on your credit card. After all, you need clothes and a credit history in your own name, so why not do both at the same time?

That’s basically a good idea, but it loses something in the cost factor. That $100 in charges is subject to maybe a 21% interest rate. Remember the interest is applied monthly on the balance, so even after making a $10 minimum payment faithfully over 10 months, you still owe money.

How can that happen? You ended up having to pay almost $20, or two additional payments, basically to “rent” the money to buy your clothes for nearly a year. Your new clothes may go out of style before you finish paying for them.

Imagine what a financial bind you would be in now if you spent $1,000 on that new stereo system. Pay close attention to the APR or Annual Percentage Rate. That is the price you pay to charge on your credit card.

The APR is applied to the outstanding balance monthly. And here’s a bit of a shocker – if you have a variable interest rate, the bank or financial institution can raise your interest rate as much as they want to - any time they want to - without warning!

“That doesn’t seem fair - no one told me!” Or did they? Yes, it was fully disclosed in the Terms and Conditions section that you agreed to without actually reading it in detail. If you have no credit history or a bad credit history, you cannot expect to get as good of a deal on APR as someone who has a good credit history.

In the credit world, you are rewarded for being financially responsible. If you cannot pay off the balance you charged on your credit card last month, at least try to make more than your minimum payment each month, to show that you are more than responsible in getting your credit history established.

For more information and the best deals on credit cards for any type of credit, please visit www.squidoo.com/yourcreditcards.

About Author

Melissa Burton is a successful home business entrepreneur, owner of www.mykidsinheritance.com. She currently mentors hundreds of affiliates in internet marketing and home business setup & management. For more articles by this author, please visit www.mykidsinheritance.com/articles.

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Credit Cards 101 for Students