July 15th, 2011 | 
Author: Credit is serious business, one that can affect the future of anyone who and not to be entered into lightly. To that end, the Feds put limitations on anyone under the age 21 who is looking to get a credit card by requiring a cosigner or proof of income to cover repayment of the balance. Card issuers are also banned from offering freebies and gifts to entice students on college campuses to sign up for a card.
But is a charge card such a bad thing? And does avoidance equal more responsible behavior when the magic age of 21 is reached? Far from it! Credit literacy and good credit management doesn’t come with age but with experience. It doesn’t matter whether you’re 20 or 60 years old, money management skills are learned.
Issuers have designed cards for students and first time credit users that encourage responsible money management. For example, the Journey Student Rewards card from Capital One not only offers 1% cash back on every dollar spent but pays a 25% bonus each month a student pays the bill on time. “This card was designed to help students build their credit confidently, and at the same time we’d love to reward the students for good card use,” said a Capital One spokeswoman.
About Cosigning
A cosigner is a parent or guardian with good credit who agrees to back your credit account, making them liable for your debt if you fail to make good on paying it back. The actions of both you and your cosigner will impact the other. So for instance, if your cosigner defaults one of their personal loans, your credit rating will suffer. There is no going back on the agreement once a cosigner has given their approval.
Cost of Using a Credit Card
Just like any contract that you are considering, the terms and conditions need to be compared before signing a card agreement. The interest rate that you will pay on outstanding balances is the most costly term to consider – the lower the better. Student cards are typically higher than the general public until it’s been proved that the credit will be managed responsibly.
Learn all about credit cards and understand the cost and gain a clearer understanding of your rights as pertains to cards with this online tutorial, The ABCs of Credit Card Finances. A parent who was concerned about the lack of education for students entering the credit arena designed the curriculum. Offered by the Center or Student Credit Card Education, Inc., register for free and access interactive lessons and quizzes and beginning learning how to choose and use a card responsibly.
Posted in