Tag Archives: paying
Student Credit Cards – An Introduction (Page 1 of 2)
Just as the term itself suggests, student credit cards are credit cards meant exclusively for students, many of whom are yet to earn a documented income with employment. Credit card issuers are mindful of students and their credit challenges so they make accommodations for students when building student credit card offers specifically. Typically, the only constraint when applying for a student credit card is the age of the student, and as mandated by the law of the country, which is typically 18 years old and above at the time of application. In many ways, a student credit card is very similar to traditional, run-of-the-mill credit cards. But the major difference, is the standard APR, or interest rate, levied for card purchases, which is relatively higher than a traditional credit card APR.
Credit Card Use & Credit Score
Student credit cards provide more financial flexibility for young students. But, while it may come in handy when paying the rent, paying tuition, purchasing books, and other necessary items like food and clothing, unbridled card swiping can sometimes lead to financial trouble, especially in the form of poor credit scores and damaged credit histories. To a certain extent, this can be blamed on a lack of education or awareness as young people, often times, will not think too much about the concept of credit scoring or the idea of building a good credit history. As a result of this lack of awareness, they will typically not restrain themselves from using the credit card freely either.
The danger of poor credit scores will not become readily apparent, but will certainly become apparent when the student approaches a bank for credit at a later point in time. Credit profiling or credit scores, as determined by any of the three credit bureaus, represent an individual’s credit life history, and black marks on credit histories, however they are acquired, will make it difficult, at worst, and more expensive, at best, to secure the lowest possible interest rate on the loan or financing. So, consequently, even if one manages to get the home loan or car loan, for instance, the interest rate, in order to accommodate the increased credit risk perceived by the bank, will be higher than normal, and in turn, much more expensive for the borrower. The bottom line is that student credit cards represent a potential risk to future economic standing if the cards are not used judiciously.
Using Student Credit Cards
As previously mentioned, it is clear that uncontrolled use of a student credit card can easily damage an individuals budding credit scoring and credit history profile. But on the flip side, intelligent spending and timely payback can go a long way toward building a solid credit history and credit score. Using the card for necessary purchases that are well within his/her payback capabilities and making the payments well within the due date can improve ones credit rating tremendously.
Credit Bureau Reporting
Why you Should Pay Off Credit Card Bills On Time
When reading about credit card tips and advices, paying your bills on time is often at the top of the list. And if you think that the reasons are quite obvious, this article will emphasize and highlight the reasons why it is important for every credit card holder to take his payment dues seriously. Why should you pay your bills on time? If you think that occasional late payments are okay, read on and be warned:
The longer you linger with debt, the more risk you put yourself in. Most credit card holders are in the habit of submitting only the minimum payment each month. But doing so means stretching your repayment period for a longer time than youre supposed to. Of course, your credit card company is okay with it since you are being charged with the interest rate anyway. But if you think this is okay, realize that youre putting yourself at risk of uncontrolled debt sooner or later.
You are badly hurting your credit. Not paying your debts on time damages your credit history. Timeliness of payment makes up 15% of your total credit score so even just a single late payment can make a big difference. On the opposite, paying on time greatly improves your credit score. And everyone knows that a higher credit score is a pass for better rates with lenders.
Late payments forfeit rewards and incentives. Credit cards with reward programs are very strict with their rules. You may be working hard trying to collect your points in your account but just one late payment can put all your hard-earned points to waste. Thus, not only are you disqualified from earning your rewards, youll also get penalized with high interest and late charges.
Late payments mean additional charges. Late payment means youll be charged with interest rates and late penalty fees. Imagine how much it would cost you if your credit card charges you with 15% interest plus late fee. You could have saved that amount and use it for more important expenses. Why pay these additional costs when you can save your money by paying your bills early?
Late fees could mean interest rate hikes with your other creditors. Have you heard of the “universal default” clause? If not, then you should be more concerned about late payments. Even if youre up to date with your debts to other creditors, they can still penalized you by increasing your rates without your notice based upon your one credit card account. However, the new Credit CARD law has prohibited creditors from imposing the “universal default” clause. Still, delinquency for 60 days allow creditors and credit card companies to increase the interest rate of the borrower.
Unpaid bills cause headaches and stress. Seriously, not being able to keep up with your bills on time is a great emotional burden. As your late fees add up, you become more anxious, stressed, worried about how you can get rid of your debts. In consequence, your personal relationships are affected, your performance at work is disrupted, your peace of mind – robbed. So why put yourself through all these emotional burden when you can avoid them?