Teaching a child the importance of being smart with money is one of the most important life-lessons that parents can pass on to their children. Understanding credit and debt is essential for individuals from all walks of life; anyone from the future Fortune 500 CEO to the aspiring Grade School Teacher will need to understand credit and debt in order to function properly and successfully in today's society. Mastering credit early in life can lead to a lifetime of financial success. Conversely, a bad start in the world of debt and credit can lead to many years of struggle and financial hard times. A person's credit history will affect his or her ability to get a good job, rent an apartment, buy a car, buy a home or get any other type of loan.

A great way for a youngster heading to college to get a start in the world of credit is by getting a student credit card:

Student Credit Cards: What's The Difference?

Student Credit Cards: The Advantages

• Emergencies: In a college atmosphere, an emergency can happen when you least expect it. Having a student credit card handy can really be a real life saver for emergencies like disabled vehicles or needing some cash for that taxi ride home from a party.
  
  
• Learn About Credit: A crucial life lesson which can have a huge impact on a person's overall quality of life. A student credit card is a big responsibility, and if a student can learn to handle one responsibly, it can give parents great comfort in the knowledge that their child is ready for the real world of money and finance.
  
  
• Track Spending: Students can effectively track their spending by reviewing and storing the monthly credit card statements that will be sent by the credit card company. This will help students understand the importance of budgeting and record keeping.
  
  
• Reduce Cash Worries: A source of a little extra peace of mind: carrying around a student credit card means that you don't have to carry too much cash in your wallet or purse.

Student Credit Cards: The Drawbacks

• High Interest Charges: The interest charges on outstanding balances are invariably higher with student credit cards due to the increased risk for the credit card company. And the interest rate on a student credit card can soar to over twenty-five percent (25%) is you miss a payment.
  
  Establishing a credit history will require some compromise, but you can always cancel a student credit card once you've graduated; the credit history you will have developed will enable you to get a standard credit card with a much better interest rate (APR.)
  
  
• Easy to Get Carried Away: Most working adults understand how easy it is to get carried away with credit cards and quickly end up with a mountain of debt. Most students, on the other hand, don't realize how easy it is to get carried away with spending, and often end getting into serious debt problems, problem that can sometimes lead to leaving school before earning a degree.
  
  Understand that using a credit card is the same a spending cash; it's a loan from the credit card company that you have to pay back. Use your student credit card wisely and sparingly. Only buy goods and services that you can realistically afford.

Student Credit Cards: Tips

• You Only Need One: To establish a credit history, a college bound student only needs to get one student credit card. Though extending credit to a young student means increased risk for a credit card company, these companies will often give you a credit card even if they know you already have one or more student credit card in your wallet. Resist the temptation of getting multiple cards. Having multiple student credit cards means that it will be much more difficult for you to stay on top of your payments, thus increasing the risk that you will miss a payment (default.)
  
  
• Don't Miss Payments: If you miss just one payment it can cost you dearly. A single missed payment will be a part of your credit history for seven (7) years and there is nothing you can do to have that negative mark removed prematurely. And with most credit card companies, missing a payment gives the credit card company the right to raise your interest rate (APR) to twenty-five percent (25%) or higher. In the long term, such a high interest rate will end up costing you a lot of money, money that you could have saved by staying on top of your monthly payments.
  
  
• Pay The Full Balance Due: or at least pay more than the minimum amount due each month. Paying the specified minimum amount due will end up costing you a lot more in interest charges in the long run. Depending on the terms, paying the minimum amount due can end up keeping you indebted to a credit card company for up to a decade or more.
  
  
• Shop Around: More and more credit card companies are offering student credit cards these days. This is great for the credit consumer because all that competition means you can end up getting a excellent credit card deal; you may even get a deal that greatly exceeds your expectations.
  
  
• Examine Your Bill: Review and scrutinize your monthly statement thoroughly and make sure that all the charges that have been posted to your card are correct. If you notice any activity that shouldn't be there, call the toll free phone number on the back of your card immediately so that the credit card company can disable the card and issue you a new one. With most credit card companies, you won't be responsible for any charges you didn't make.
  
  
• Let Your Student Credit Card Provider Know When You Move: You can avoid all kinds of fees and charges by making sure that your credit card company knows when you've moved to a new location. You can't expect a credit card company to know when you've moved; it's up to you to keep your student credit card company apprised of your current address.

New Report: Students Are Becoming More
Responsible with Student Credit Cards

Great news! According to a recent report by Nellie Mae, undergraduate students are becoming more responsible about using student credit cards, with both student credit card ownership and outstanding balances on the decline. Click here to read the full report (PDF).

To conclude, student credit cards can be an excellent way for youngsters to establish and build a credit history, but students: make sure that you're ready; many college and high school students aren't ready for the responsibility that comes with having a student credit card (I know I wasn't!), and credit related mistakes made early in life can take many, many years to fix.

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