Student Credit Card and Credit Education Blog

Do you currently face an increasing amount of credit card debt? And do you happen to be in graduate school?  In 2006, a college financing company surveyed graduate students in order to determine their card usage statistics. Here are the highlights that I found most intriguing:

• The average balance of graduate student cards is over $8,600
• Only 20% of survey respondents paid off their balance each month
• Ninety-three percent of these students would have appreciated their undergraduate school to have offered financial management classes
• About 94% of these grad students used credit cards to pay for some portion of their direct education expenses, primarily textbooks.

The fact that the average balance is so high is a bit scary. If it’s not paid off, these students could see their interest increase the balance another $1,500 each year!

Of the above points, the latter is the only statistic that we, at StudentPlatinum, would possibly recommend. If you’ve got a low enough APR and you couldn’t find a better deal with a private college loan, then financing your education would have some value. Other than that, the high balance students have - combined with the low number of students who pay their entire balance - makes it seem that additional financial education even at the high school level would be extremely valuable. Just don’t ask the credit card companies to foot the bill!

Many believe that having bad/poor/weak credit is the exact same issue as not having any credit. That’s not quite right - they are actually different from one another.

Having “no credit” refers to situations when you’ve never owned a car, rented an apartment or had a credit card. At this point, lenders (card companies) have absolutely no idea whether or not you’d be a good candidate for paying back the bills you generate. In these situations, getting mom or dad to co-sign your student credit card (provided they have good credit) will allow you to get started with plastic.

If you are one of those with “bad” or “not so good” credit, you’ve already had your shot at a credit card or apartment rental and didn’t do such a great job. Certainly, unforeseen circumstances could have taken place (family emergency, financial difficulties, etc.) but your credit score doesn’t care about those issues - a low credit score is a low credit score.

Some suggestions for those with weaker credit:

• Specific credit cards for low credit - Many car companies offer cards for those with weaker credit. These may have additional upfront costs (annual fee, application fee), but by paying them off, you’ll improve your credit score and eventually upgrade to a card for those with stronger credit.
• Secured credit card - This type of card allows customers to provide an initial outlay of cash as the funding source for their card. By providing a fail-safe amount of money, it’ll be much easier to pay it off each month.
• Department store/gas cards  - Whether it’s Mobil or Macy’s, most retailers have leaner restrictions on who they provide credit for. Therefore, it’s almost like a second chance at establishing credit. Just make sure to pay back what you use, as these types of cards generally have much higher APRs!

So, make sure you understand the difference between lacking credit and not having good credit. Both can be fixed, as long as you take the appropriate steps to do so.

Re-age? What does that mean? Redo first grade? Go through puberty again? No no, it refers to your credit card account, (naturally). Let’s look at some details.

Wow, that new plasma TV looks great in your living room. The colors! The details! Everything is wonderful - until you get your bill and find out that your expenses for the month have far exceeded what you can afford at this point. You ultimately incur late fees and interest on this payment. And, of course, more bills and expenses come the next month, so how much longer can you do this?

When situations like the above take place, one option that credit card holders have is to “re-age” their account. This means that the account reverts back to a status when there were no late fees and your account status was “current” rather than “delinquent”. Had a lower interest rate? You’ll be there, as well.

How does this happen? You need to strike a deal with your credit card rep and ask them to re-age. You can only do it once a year, and they need some sort of agreement that this was just a fluke and that you’ll continue with on-time payments (they don’t have to be in full). Once you get a verbal OK from them, ask for something in writing, in case there is a computer fowl up of your account and the re-aging accidentally gets forgotten.

Is this always the best route? For the most part, yes. Getting your account back in good standing will assist you with your credit and also with getting the best APR. However, if you’ve only missed one payment and then are back on track, it probably isn’t worth re-aging. Since you can only do it every 12 months, it’s better when you’ve got multiple months of late fees that would otherwise kick up your interest rate and knock down your credit score.

A friend of mine recently received a postcard in the mail from Discover. Inside, it said that his standard APR was about to double - from 12% to almost 21%! This was preposterous to him, so he picked up the phone and gave Discover a ring.

Rep: “Discover credit card services. How can I help you?”
Friend: “Yes, I just received a postcard saying my APR has doubled. I’ve always paid my bill on time and have been a customer for years. Why did my rate suddenly increase so much?”
Rep: “(looking at the account) Yes…I see that you received that card in the mail. Let me transfer you to a Credit Specialist.”

At this point, my friend was quite worried that something was wrong. Why else would he need a “credit specialist”?

The so-called “specialist” gets on the phone:
“Hello, how can I help you?”
Friend: “Hi, I’m calling about the postcard that’s raising my rate. Can you give me reasons why you did this?”
Credit rep: “Oh (checking the account) we can keep your rate where it is…”
Friend (being quite nice): “Well, actually, it’d be even better if you could lower it.”
Credit rep: “Sure we can do that - how about we take you from 12% to 10%?”
Friend (ecstatic): “That’d be terrific, thank you!”

So, the card was mostly checking to see if their customers actually read their postal mail. In this case, it actually benefited the customer, because the rate was lowered. Granted, it did take some time out of my friend’s day, but he saved himself from a drastic increase in APR, and actually ended up with something better!

My friend’s cell phone contract was about up and she was tired of paying the higher rates. What did she do? Well, if you read the title of this blog post, obviously she gave them a ring. Right of the bat, she gave them a call and asked for the cancellation department. She was connected fairly quickly and asked to close her account. Of course, they ask, “How come?” Her response was that it was too expensive and she’d found some other very enticing offers.

The rep, not interested in losing a customer, ran down what she has now - 700 minutes, unlimited texting and Internet. All for $60/month. Their counter was quite good - 1000 minutes, texts and Internet. All for $45/month! So, she’d receive 33% more minutes at 25% less per month. She was quite pleased and I recommend that everyone does this if they aren’t in a cell phone contract.

And, since this blog is about credit cards for students, the same goes for your plastic - don’t like your APR? Accumulated a fee for something unusual? Just pick up the phone!

It’s Friday - so instead of student credit card information, let’s watch some clever credit card commercials.

Visa: Yao Ming

Mastercard: Do you have the funk?

Mastercard: Homer Simpson

Enjoy!

You’ve taken out some student loans. And now, since you’ve graduated, it’s time to start paying them back. Sure, you can make the monthly payment your requested by your lender - and ultimately take the typical amount of time it takes to pay off your loans. Sounds good.

Another option you can work with, is to take advantage of your credit card’s cash advance option. Provided you’re able to do it for free and you have 0% APR with your card. If these two stipulations are in place, what you can do is write a check against your credit card balance and apply this to your student loan balance. Particularly if you have a private school loan with an interest rate approaching 10%, taking advantage of the 0% would work nicely. If you do this, just make sure you’re able to pay off your balance before the 0% expires, or else your interest rate may exceed the amount you’re paying on your private loan. That wouldn’t be a lot of fun.

Did you accidentally not pay off the balance before the 0% expired? It isn’t time to freak out - just pick up the phone.

Many college students have either just bought their first car or are interested in information about buying one. That’s one major advantage of the Citi Driver’s Edge Card. It’s geared for students in either situation via its unique rebate program.

At the minimum you receive 1% back on all purchases. This jumps to 3% at gas stations, supermarkets, and drugstores. In addition, you receive $1 back for every 100 miles you drive. This all maxes out at $500 every 12 months in driving rebates and up to a total of $1,000 every 12 months in overall rebates. Not bad.

The only issue I find with the money you receive back is that it must be redeemed toward car maintenance, the purchase or lease of any new or used vehicle, or used in the Citi online store for gift cards, merchandise and services. So you can’t just get a credit applied to your account or a check in the mail, but the options they do give you are plentiful.

Overall, the Citi Driver’s Edge Card is a solid start to your credit card charging experience. You get something back for the effort of using it, and the APR is 0% for the first 6 months of use. But you won’t have to worry about that - right?

Have you had this debate with yourself? You’re at the mall, looking at shoes. Not because you need a new pair, but because you want them. The desire wins the fight, you find the pair you like, and head up to the counter with your plastic. Now, you pay your bill in full every month, right? Right? You don’t want to be taking out a another loan with even more unfavorable terms than your present student loans?

Credit card balances are loans. Plain and simple. You are borrowing money from Chase, Citi, Bank of America, etc and they are charging you interest on your loan (i.e., shoes). Except this interest starts compounding the month after you don’t pay your bill.

A great alternative to purchasing computers, textbooks or any other living expenses with a credit card is to apply for private student loans. You can potentially deduct student loan interest from your taxes, and also participate in loan forgiveness programs. Neither of these can be done with credit card interest. Finally, your interest rate for your credit card can increase dramatically at the drop of a hat, while private loan lenders will do it very gradually. All these reasons make private loans a much better option for your new pair of shoes!