What Should a College Student Know About Credit Cards?

Getting a credit card, whether for the first time or not, while you are in college can be a burden and a blessing at the same time. It gives you something that you have to pay on each month and gets you into debt that you really do not want, but it can also help you to meet the demands of college life, like paying for tuition, books, rent, and food when they are required and in full. Still, there are a few things that college students should be aware of concerning credit cards.

Credit cards affect any person’s life, and starting out using credit cards in college can either help or hurt your future and your finances. Having what it takes to pay your bills, keep your debt low, and stay in a position where you can gain points on your credit score and not lose them takes a lot more skill and discipline than most young people think. The most important thing you can do with your credit card, especially at the difficult and money-tight time of your life, is to control it so that you do not accumulate debt that you cannot pay back soon.

Credit card debt has become a big problem for a lot of people. Many of the younger generation do not realize what a stressful and difficult life they can have if they get themselves into debt so far. The convenience is just not worth it.

One of the key things you need to have when you sign up for a credit card in order to better stay out of debt is a knowledge of the credit card agreement you are signing up for. There is nothing that will hurt you more than misunderstanding how your credit card works, how you will be charged interest, and what kinds of things you do with your credit card that can hurt your credit score.
Make sure that you read the details of the credit card application, call a representative if you have any questions, and make sure you know exactly what you are agreeing to before you agree to it.

What college students often may not realize is that your credit score can often times be a determining factor concerning your prospective employment. Many potential employers are allowed access and will use that access to check your credit score. This alone could possibly sway the employer’s decision about whether or not to hire you, so you want your credit score to reflect a good and disciplined credit history so that you can get the job that you probably desperately need, since you are working to not only put food on the table, but to go to school.

College is a very tender part of life when it comes to having credit cards. It’s good to have them so you can build on your credit score. Still, if they are misused, you will not only be deep in debt, but your credit score will suffer considerably.

How Do You Understand Credit Card Application Terminology?

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Applying a credit card is not easy to begin with, and the words they use that are difficult to understand are not helping any. The one thing you want most, when you are applying for a credit card, is to understand the details of the application and the terms and conditions of the credit card loan. But how could you possibly do that with all the seemingly foreign language they use in the advertisement alone, to say nothing of the actual details.

Knowing what you are reading on a credit card application is important. But sometimes, even talking on the phone with a representative from a credit card company, it can be difficult to understand and follow along. Here are a few words that may be useful to know, what they mean, and what they have to do with getting a credit card.

Collateral

Collateral is some sort of asset, or something that you own that is of value, that you are willing to secure a credit card loan with. It secures your loan so that if you do not pay your bills, whatever you put up for collateral will be taken by the credit card company. If you are applying for a secured credit card, you will be required to pledge something that you own that is worth a certain amount in case you fail to pay your bills, or if you take out bankruptcy.

Credit Scoring System

This refers to the complex equation and factors that are calculated into your credit score. Your credit score and your credit report will determine whether or not you will be approved for a credit card, and how much your interest will be.

Annual Percentage Rate

Usually this is written as APR. Annual Percentage Rate is the percentage of the principle you will be charged in interest per year. This amount compounds each month, so the APR should not be confused with the actual interest rate. They are two seperate calculations of interest.

Fixed Rate

A fixed interest rate is a rate that will not change unless you make late payments. A fixed interest rate basically stays the same if you pay your bills on time and do not incur other penalties on yourself. There are some fixed rates that only last for a certain period of time, but others last for the entire time that the credit card account is open and active.

Finance Charge

Basically, this is what they use to describe your overall interest. A finance charge is a charge or fee they require you to pay for borrowing money on credit. So when you see “finance charge” written on an application, that is the total amount estimated that you will pay in interest.

There are several things you may not understand when you are trying to apply for a credit card. Along with the hassle of applying, you should not have to worry about the terminology. Knowing what you’re getting into is essential, and can save you loads of money in the future.