Student Credit Card and Credit Education Blog

There are certain features of credit cards which may provide card companies with additional revenue, but are major pains for those who succumb to problems they create. One of these is a method sometimes used to calculate interest which is called the two cycle average daily balance practice.

What does this long name mean? It’s actually very simple. Say you have a card with a $1000 balance and 15% APR. Your interest for the month is simple - $150/12 = $12.50. Easy. With the two cycle average daily balance, it takes into consideration what your balance was the prior month as well. If that number was higher, this process averages the two balances and you’ll end up having more interest tacked on to your bill. Not fun.

It is possible that this process can work to your advantage. If your balances were reversed ($1000 the first month and $1500 the second), you’d actually be paying interest on $1250 instead of $1500, which isn’t bad.

Regardless, this is a somewhat complex way of generating interest on card balances, which need to be watched very closely in order to avoid paying unnecessary. In order to simplify your life and interest calculations, just avoid cards with this feature!

Not only can you use your card for buying new clothes or coffee, but you should absolutely keep in mind some of the other perks your student credit card offers you. American Express is known for offering a number of these benefits, including:

• Buyer’s Assurance Plan - This service extends your U.S. warranty by one year (as long as the initial warranty was less than five years). This is an excellent bonus, particularly if you have a 90 day warranty that’s extended a full year.
• Return Protection - Not happy with an item but you’ve already waited 30 days? With your AMEX card, you’ve got a total of 90 days to return your product.
• Car Rental Loss & Damage Insurance Plan - Everyone debates whether to buy the extended coverage offered by car rental companies. It’s rare that it’s actually used, so most perceive it as just additional profit for the Hertz of the world. This card benefit tells you to say “no” to the rental company and AMEX will provide “coverage against theft of or
  damage to most rental vehicles.” Yes, it’s a bit vague so you may want to research further before relying on it.

Other cards have additional of bonuses you may find useful. One benefit I read was used recently was with regards to the $200 price drop of the Apple iPhone. The credit card had a feature that provided pricematching up to 60 days after the original purchase. (AT&T, the retailer, was only 14) Since the iPhone was released less than two months ago, this decrease definitely qualified, so it was a nice $200 bonus for using the card. The Citi Diamonds Preferred Rewards card is one example of a card that does this. Check to see if yours does as well!

Has this happened to you? You just received your most recent credit card statement and are taking a gander through your monthly charges - Starbucks? Check. McDonalds? Uh huh. Best Buy? OK. Candy’s Candles of Cream? Hello? Um, never heard of it. Someone has your card number and this needs to stop.

Steps to take:

1. Call your credit card - They’ll cancel your card and should have no problem negating the problematic charges.
2. Edit your accounts - Does Amazon have this card number? Delete it. Same with your cell phone provider, Paypal, and anyone else.
3. Get a new card…and be careful! - Feel free to get the same one, but you may be able to find something with a lower interest rate or better rewards. Take a look with our credit card finder.

How might this have happened? A few ways - someone stole it through an online purchase, an unscrupulous, undertipped waiter/waitress wrote it down, your wallet was “borrowed”, etc. So, keep your passwords private and your cards with you as much as possible.

One thing to keep in mind: if this was a debit card that was stolen, you may have a bigger fight on your hands. Since these charges come right of your account, it may be trickier to prove illicit charges. I’ve spoken about these cards before.

Now, instead, let’s say you were mischarged for a purchase. This certainly does happen. First, you could go to the place of business that took your card. If you have a receipt, you’re golden. If not, and your positive the bill was incorrect, it’s another opportunity to contact your card company. They usually need some type of proof, so hopefully you’ve got that receipt.

As of now, the predictions are that the meeting of the Federal Reserve Board will agree on reducing a key interest rate by a quarter to a half a point. In a nutshell, they are doing this primarily to slow the decline of the housing market. This is due to slowly escalating interest rates as well as the thousands of mortgages whose rates are variable (not fixed) and are beginning to adjust to the new rate, which can create much larger monthly payments. Definitely a potential problem for a lot of people. If you aren’t familiar with mortgages, consider if your landlord increased your rent by 10-20% for absolutely no reason. Not fun.

This rate cut will most likely affect other important rates as well. Student credit card APR and interest rates may decrease as may student loan rates. These are both good things. However, other rates that may decline are savings accounts, which is not so good. Can’t win them all, but I think the positives outweigh the negatives here.

Read more info on the rate cut: http://www.iht.com/articles/ap/2007/09/18/business/NA-FIN-ECO-US-Interest-Rates.php

After months of making additions and tweaks to the old website, we’ve finally completed work on the new StudentPlatinum.com. The redesigned student credit card and credit education site includes additional information for even more credit-related questions.

More specifics?

• New articles have been (and will be) added to our credit card education section that answer frequently asked questions about credit-related topics that students ask about most.
• The most recent blog posts now appear on the home page, for easy access.
• Easily accessible specs on our most popular student credit cards, so that you can quickly compare their features.

Of course, there will be more changes as the site evolves, but the new design is in place and raring to keep our visitors informed with all student credit-related topics! As always, feel free to comment on the blog, or fire an email to customerservice@studentplatinum.com with comments, critiques, criticisms, and caviar.

The major defining feature of your credit score is how you handle the responsibility of credit. If you handle it well and pay your bill on time, your score increases and lenders are less worried about whether you will pay it back. Unfortunately, they are also beginning to look at other factors, such as whether or not you pay your electric/gas/phone/cable bill on time.

Why the change? Well, credit card companies are worried about their customers. They don’t want to have situations where someone racks up thousands of dollars in their balance and then files for bankruptcy, in which the credit card company loses as well. Therefore, card suppliers (Citibank, Chase, Capital One, etc.) are looking out for other signs of trouble paying bills. And these include the aforementioned utilities and other areas, like auto and home insurance payments. Speaking of the latter, your rates for insurance may also more than likely be tied to your credit score.

What can this do to you? If you do happen to let your cable bill lapse a few extra days, give them a call and let them know beforehand. The same goes for the rest of your bills. This is particularly important if you’ve got a credit card balance as you don’t want your interest rate to go up.

I had always assumed the term “charge card” could be used interchangeably with “credit card,” only that the former was an outdated term. Recently, though, I was reading a few credit-related articles and my assumption was proven very wrong. Thus, I’d like to share with you what I learned.

While a credit card supplies their customers with a set amount of credit, the charge card does not. This type of card lets customers spend what they want, as long as it is paid off at the end of the month. You can’t carry a balance, the way you can with a credit card, so you also don’t have the chance to accumulate interest and large balances. So, you may ask, “What happens if you don’t pay off the balance?” Generally, partially paying off what you owe (or not paying at all) may result in a hefty late fee and possibly restrict your usage of the card or have it canceled entirely.

How do you get one of these cards? American Express has a number of options to receive a charge card, and they also have options for customers to prolong payments on large purchases, provided they let AMEX know ahead of time. Other companies that offer charge cards include certain retailers, such as Neiman Marcus, and Diner’s Club.

Is there an advantage to a charge card over a credit card? Unless you need a very high spending limit (which you plan to fully pay off at the end of the month) and don’t mind the annual fee they usually charge, it’ll probably make more sense for you to stick with a credit card for students. This way, if you need to, you’ll have the opportunity to carry a balance without losing the card.