Credit Cards on Campus

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Credit Cards on Campus

You've seen the ads and have been tempted by the giveaways - but how much do you really know about credit cards? Wading through offers to find a credit card that suits your student lifestyle can be tricky. If you know a little about how credit works and your options, you can start your credit reports off on the right foot. Here's a crash course in credit cards:


The prevalence of credit cards among college students has been growing fast over the last few years. According to Nellie Mae, 83% of undergraduate students in 2002 had credit cards, a 24% increase in credit usage from 1998. Plus, undergrads now have a whopping 4.25 credit cards to their name on average. There's a downside to all this credit mania - the number of bankruptcies filed by people under 25 is also escalating, up 33% between 1991 and 2000. Now that you know the credit stats, let's move on to some of the details.


Think you're ready for a credit card? Opening a credit account has its benefits: you'll have access to emergency funds, you can start building your credit reports and your purchases are protected if damaged or stolen. It also has its dangers: you can easily rack up serious debt, interest rates can cost you and you might damage your credit report if not careful. Opening a credit account is only a good idea if you are sure you can use it responsibly.


How can you find the card that is right for you? There are four major factors to take into consideration when looking at credit card offers:

  • Card Type- Credit cards come in all sorts of shapes and sizes. Standard issue financial institution and bank credit cards are most common. Credit unions are another good source and will often offer equivalent rates. If you don't qualify for an ordinary credit card, investigate secured credit cards that use a security deposit as collateral.
  • Annual Percentage Rate (APR) - As a student your interest rates will probably range between 10-18% percent. This is higher than the rates an established borrower would receive but better than the rate for people with limited credit histories. Read the APR offer closely to see what the terms are for the introductory rate. The lower the rate, the less your credit spending will cost.
  • Annual Fees - Most standard credit cards don't come with annual fees. Some premium or reward cards, such as airline mileage cards, charge annual fees. Look at the small print disclosure to see if your card has a hidden annual fee. Also keep an eye out for excessive late fees, transaction fees and over-limit fees.
  • Grace Period - The grace period on a credit card is the amount of time between when you make a purchase and when interest is applied to the purchase. For many cards, the interest-free grace period is around 25 days. Cards with small or non-existent grace periods will cost you more.


Once you start using your new card, it's a good idea to check your credit history online to see if the account is being recorded correctly. Your credit reports from TransUnion, Equifax, and Experian should have accurate information about the account's name, open date, balance, monthly payment and credit limit. You can learn more about your credit profile online at Credit Karma. After a few months you'll want to check again to make sure your payment history is being reported properly. Late payments can damage your credit score for up to 7 years and can lead to problems receiving new credit in the future.


The lethal student combination of a limited income and a lot of opportunities for spending makes it easy for young credit card users to end up in deep debt. Using your new credit card to pay a regular monthly expense (like gasoline or cable) is a good way to start; you'll know what to expect from your bill and can pay it in full each month. Having a conservative credit philosophy will help you graduate with your debt under control.

Sponsored by: TransUnion

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Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

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4.25 credit cards per student? What does a 20 year old need even 2 cards for? I am a college student without a credit card and I get by just fine. Another example of the "gotta have it" consumerism of the US ruining people's lives as they get deeper and deeper in debt (this before even graduating and getting a full-time job).

Commend you for your responsible approach. Just keep in mind that credit cards can help you build credit. Just think ahead if you want a mortgage or auto loan in 5-10 years. If you can buy those in cash too, then you should never have to worry about credit.

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CK Moderator

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@CK Moderator: I do have a PayPal Buyer Credit account, and purchases to that and regular payments will post to my credit account (I presume). Also, once my college loans (Stafford) enter repayment, that should help me build credit as well without requiring credit cards with high interest rates and annual fees.

Like I said, I think you are doing the right things. Just keep an eye on your score long term to make sure you will get the best rates.

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There was an excellent article in the NY Times a couple of weeks ago, about how credit card companies are in bed with Universities and there are serious conflicts of interest. The article is called "Colleges Profit as Banks Market Credit Cards to Students". If you're a student, please be aware that your school may be getting a kick back from the credit card companies they invite on campus. Schools are also selling student information to these companies. Instead of using university leverage to get lower rates and better deals for students, they are just taking kick backs. It is really shameful and wrong. Instead of promoting responsible credit use, many universities are using students to make money off of banks. Read the article and beware!

link to article >

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Credit Unions are the sure way to go when it comes to a student credit card. They aren't there to make money off of the student. They are there to help the student establish credit and just plain help them financially.

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