Student Credit Cards 101

If you’re a college student, you probably already have a credit card. If not, you may have plans to get one or more soon. So why should you read on?
Because financial debt is one of the main reasons that many students end up dropping out of college.

Because your college years can be some of your most memorable–and some of your most costly. They don’t, however, have to be the beginning of an adult life strapped with debt.

Although you may still feel in limbo between your teen years and adulthood, it’s time to take charge of your finances and manage them as an adult. The sooner you do, the sooner you’ll be able to start saving and spending your own money.

For those new to credit cards and for others who know all about credit, let’s go back to the basics.Why do credit card companies court college students?It’s obvious by the friendly representatives who offer a free t-shirt or CD just for signing up in the student center. Or the applications slipped into bookstore bags. Or mail boxes crowded with card offers. Credit card companies want college students to carry their card.Did you ever stop to wonder why? One reason is loyalty–once a person has a card in their wallet, they are likely to keep that particular card and its upgrades for years to come. Another reason: college students are good customers.While this may seem ironic considering that most college students are without a steady source of income, Robert Manning, Ph.D., Professor in the College of Business at Rochester Institute of Technology and author of Credit Card Nation, says this is one example of how the credit card industry has changed radically in the past decade or so. “Previously, conservative rules deemed a good customer as one that paid their bills on time,” he says. “Now, a good customer is one that can’t repay their debt.””Credit is no longer an earned privilege,” continues Dr. Manning. “It’s now considered a social entitlement, and the screening criteria (for card applicants) is weak.”Banks make money by charging annual fees, late payment penalties and interest fees on unpaid credit card balances. Therefore, card holders with revolving debt (those who do not pay their balances in full each month) are desirable. illustrates this point beautifully through an example of a student with a credit card balance of $7,000 at an interest rate of 18.9%. If this student faithfully makes the minimum monthly payment of 3% or $25 – whichever is higher, and does not charge anything else to the account, it will take more than 16 years and $7,173 in interest fees to repay the bill!Additionally, Manning notes the banking industry has learned that college students will draw upon various sources of income to pay their debt–including student loans, money from part-time jobs, and as a last resort, many will ask a family member to supply the funds to get them out of debt.How to make credit work for you, not against youAccording to Nellie Mae, 81% of college freshman have at least one credit card. And for good reason. Credit cards enable online purchases–from text books to concert tickets, make it possible to rent a car, and help with medical emergencies or vehicle breakdowns. Used wisely, credit cards can be helpful throughout college, and can assist you in the development of financial management skills.As soon as you get your first credit card or loan, you have entered the world of credit reports and scores. A credit report is compiled by credit bureaus and contains information about your identity and credit relationships, among other things. Credit scoring is a system that lenders use to help determine your ‘credit worthiness.’ Credit scores are based upon your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt and the age of your accounts.It’s vital to know that your credit score affects your ability to get loans, car loans, and home mortgages. Future jobs and insurance premiums can also be influenced by your credit score. By paying your bills in full or in a timely manner, a credit card will help you establish a good credit score. Late payment or no payment will help you earn a poor credit score. For more information on credit reports and scores and how they affect you, check out a new view about creditMary Ann Campbell, CFP, founder of and a money educator, cites unrealistic expectations as a major reason for high student debt.Campbell, who teaches personal finance courses, says “Many students’ expectations of their earning potential after college far exceeds what their actual income will be.” She notes that some students use their credit cards with abandon during college, planning to pay off their debt when they land that great job after college. Indeed, some students forget that in order to get to the top of the career ladder, there are a few rungs, i.e., less paying jobs, they have to climb first. And the expense of starting a new job and life on your own can just add to existing debt.Manning’s website,, contains a great resource for students seeking a more realistic view of the first few years after college. Using the ‘Budget Estimator,’ a module designed by Manning, students can identify an average yearly or monthly starting salary for jobs in their particular major. The program automatically figures in estimates for taxes and social security payments. Students can then plug in expenses for housing, car payments, utilities, food, insurance, telephone and internet bills, clothing, credit card bills, student loan payments, and entertainment, etc. The module lets you know when you have spent more money than you make, and allows you to adjust payments as necessary until you get the hang of how your money is best distributed.Students that seem to have the most credit woes? Those who believe their standard of living during and after college should not vary from when they lived at home on their parents’ income. Cable television, cell phones with cameras, and new cars become ‘necessities’ instead of nice extras.Advice to grow onWhen it comes to credit cards, students have great advice for other students. Heather, a college junior from Arkansas, recommends getting one card with a low limit. “This limits the amount of credit you have access to and therefore removes the temptation to spend more than you have or more than you can pay off immediately,” she says.Another student recommends selectivity. “Don’t sign up for a card that charges an annual fee to use it, and read the terms of the card before applying. You wouldn’t believe how many people don’t know what an APR rate is.” For more information on finding the best rated cards, check out You can read reviews of cards from other students and get the lowdown on perks of various credit cards.Campbell has three recommendations for students: The first is open communication. Campbell says students who are educated about financial matters seem to have a better overall attitude regarding credit cards. Students should find a trusted source to talk openly with about money issues. Second, students should switch from spending behaviors (such as shopping) to activities that help you achieve the same feeling of gratification or reward, such as intramurals, exercise or campus organizations.Last, but certainly not least, enroll in a personal finance course as soon as your schedule allows. Says Campbell, “If it’s not required coursework, take it as an elective. You will learn a set of life skills that will not only help you right now, but also after college and for the rest of your life.”

It’s Easy To Find A 0 Apr Credit Card

Millions of Americans have credit cards, using them almost every day for everything from mundane things like groceries to exciting purchases like vacations. But unless you already have a 0 APR Visa, Mastercard, or Discover credit card, chances are you’re still looking for one. Who wouldn’t want a credit card that offered 0 percent APR?The APR is the annual percentage rate, and it determines how much interest you pay on your credit card. No-interest credit is the best, obviously; a credit card with no APR means you’re paying back only the amount you borrowed, with no additional charges. When the bank makes you a 0 APR credit card offer, you’re liable to jump at the chance! But you don’t need to wait for the bank or credit card company to come to you. You can get a 0% APR credit card yourself.First you’ll need to check your credit score. The credit card companies are more likely to give you a low-repayment credit card as a “reward” for being a low-risk consumer. Get a copy of your credit report from one of the online sources available — you’re entitled by law to one free credit report per year — and see if there are any blemishes that might prevent you from getting a 0 APR credit card. You should check your report even if you’re sure you’ve never done anything to earn bad credit, because mistakes can creep into your report. The last thing you want is to be denied an interest-free credit card because of something you didn’t even do!Once you’ve confirmed your credit report is solid, or done what’s necessary to clean it up, you can apply for a credit card with confidence. There are two ways you can go about getting no-interest credit. One is to approach your currentcredit card companies and request a lower interest rate. Tell them you’d like to do a balance transfer, point out your positive credit history, and ask for zero APR credit. Many times, they will give you 0 APR for a period of six months or a year, which is fine: Before the time is up, you can set up 0 percent APR on a different card and transfer the balance. If your credit stays good, you could move your balance from one card to another indefinitely, thus keeping 0 APR credit for the life of the loan.Another option is to open new credit cards that have 0 APR offers. These are easily found online, and the 0 APR credit card is usually an “introductory” offer, which means it switches to a higher APR after six months or a year. The same procedure applies: Take advantage of the offer, and then transfer the balance to another 0 APR credit card [] before the time is up. Before you get any new credit cards, though, be sure to check into their policies on balance transfers. Some have different APRs for balance transfers as opposed to purchases.With a little work and careful spending habits, it’s possible for anyone with good credit to get a 0 APR credit card. Why should the credit card company get all your hard-earned money with its fees and APRs? No-interest credit is the way to go. Good luck, and happy spending!

Mortgage Meltdown Creates Home Financing Obstacles

Thanks to the surplus of inventory and historically low mortgage rates, the time has never been better to buy a new home. The reality is that most people do not have the spare bundles of cash lying around to buy their potential properties outright and need to rely on securing a home loan to finance their purchase of the American Dream.However, the landscape of the real estate market has substantially changed since the days of your parent’s mortgage. Borrowers are now under greater financial scrutiny than ever as lenders now are interested in mitigating their chances of losing money because of a high-risk borrower.The change in attitude is a direct result of the mortgage meltdown kicked off by the subprime mortgage mess. Private lenders and federal agencies are tightening the standards associated with the loan approval process, leaving many potential homebuyers high and dry. Prior to the mortgage mess, it was not uncommon for five or six mortgage applications to make it through the approval process. According to The Legacy Group (Bellevue, Washington) loan officer Paul McFadden, “These days, the number of mortgage applications that get approved is probably three out of 10.” Here is why:
Higher Credit Score Required: Lenders have used credit histories and scores to determine the potential “loan-worthiness” of applicants for decades. Now only potential borrowers with credit scores exceeding 700 can qualify for the best mortgage rates out there. Although there are still mortgage opportunities for those with scores underneath that value, but the interest rates charged will be significantly higher for this demographic.
Income and Assets Under the Microscope: Prior to the mortgage meltdown, paper proof of both income and assets were enough to secure a mortgage. Lenders are now taking the time to verify the information by making phone calls and triple checking all paperwork submitted.
Pregnancy: Being pregnant is not a legal path to discrimination, but the New York Times reported that maternity and paternity leave might be seen as a potential “loss of income.” Technically, this type of interference should be categorized under “Income and Assets Under the Microscope.”
Home Appraisals: Thanks to the crop of under water properties, mortgage lenders are ordering stricter reviews of submitted home appraisals. Homes that do not appraise for the full contract price are subject to disapproval.
Mortgage Industry Shake Up: Prior to the real estate bubble bursting, mortgage offers with enticing promotional rates were abundant and easy to secure. Right now, the industry is in flux as it attempts to clean up the mess and get business back on track. However, the guidelines are evolving everyday, creating a challenge for lenders regarding instructions on the mortgage approval process. Additionally Congress introduced new regulations to limit the power of predatory lenders, and the blanket laws are negatively impacting small business owners and independent contractors in the mortgage industry.
Tighter Condo Approval Rules: Although condo living can provide a fantastic quality of life, those interested in financing purchase of a unit should expect challenges in the mortgage approval process. Typically, condos are considered to be a riskier type of home purchases and are charged slightly higher mortgage interest rates than single-family home purchases. The reason why, condos have a community behind them and the finances of the community (as well as the buyer) are being analyzed more intensely by mortgage lenders.

Home Insurance Coverage

Home insurance policies are helpful when you own a home. Most times when people take out mortgage loans, the lender will expect the buyer to purchase coverage. The mortgage lender may ask the buyer to opt for minimal coverage; however, is the minimal coverage enough. At any time, a natural disaster can sweep a home from its roots and sling it across the region. Statistics have shown that floods alone have targeted “25%” of low risk and moderate risk neighborhoods, therefore, at any time your home could be at risk.When you have invested large sums of money on a property, the last thing you need is to put your home at risk. The home is not the only issue to consider, since homes often have valuable property. Thus, insurance companies’ are designed to protect both your home and its contents.Most insurance coverage will offer flood insurance upfront, however few companies fail to make the offer. The insurance companies’ that present flood coverage will often ask the client to join in the “National Flood Insurance Program.”There are many things to consider when searching for home insurance. If you have a home-based business, you will need the maximum insurance coverage, since expensive equipment is often involved. The weather is unpredictable alone, however, other unforeseen occurrences, such as explosive water pipes. The insurance companies will often cover unforeseen disasters, including Mudflows, floods, tidal waters, hurricanes, tornadoes, melting snow, and so forth. If you live in a wooded area, then you are at risk, since mush land is vulnerable and floods often occur.Other things need consideration when applying for home insurance. If you live in a mobile home, or else own a condominium, then you will need coverage that will accommodate the special circumstances.While, insurance companies’ offer different types of policies for condominiums, they are susceptible regarding mobile homes. The contents and mobile home itself is not the biggest expense to home insurance providers. Rather, insurance companies are vulnerable to coverage for mobiles, since the home presents out of the ordinary risks. The company will consider mobile home status, neighborhood, year, make, model and other details when considering mobile homes. Most likely, the company will charge high premiums and higher rates to insure the property. New mobiles often cost less to cover, but not as low as the homes that are not risky.Researching the market can help you find the right agency that offers the best rates on home insurance. Not only will you find better rates, lower premiums, and comprehensive coverage, you will also learn details about the specific company you are applying for coverage.If you are still paying mortgage, then lenders will expect coverage on your home. Therefore, if you agreed to the mortgage loan arrangements, you may want to find out if you have coverage. It is your choice to find a reasonable home insurance agency, therefore, if you find a good deal you might want to talk with your mortgage lender to drop the insurance integrated into your mortgage payments. You will also need to show copies to your lender that home insurance is existing.Fires are common in many neighborhoods. At least one home out of 100 in a single neighborhood will experience fire. If your home is destroyed by fire, you will loose your home and everything in the home. If you do not have insurance, then getting back on your feet can become a struggle.The premiums on the policy will offer a measure of coverage against fires. Many insurance companies’ will factor in fire from the onset of the application. The companies’ will consider fire, flood, depreciation, replacement charges and so forth when considering coverage. Thus, when taking out home insurance make sure you talk with your agent about changes in rates and premiums as a result of depreciation. Most times if the depreciation of the home has dropped, the company will charge steeper premiums.The Entire Coverage Packages, or Full Coverage plans often have higher premiums, but you must consider that the policy is covering the entire content of your home, plus the home itself. Be advised that few policies have restrictions and exclusions, thus research and learn more.

Your Financial Future – The Decision to Go High Tech With Your Home Finances

With the movement across the nation going toward getting your finances in order, there are more people than ever looking into financial software for their personal use. The old tried and true method of pen and paper (and checkbook registers) still works for some, but others will find they have a need for more. Maybe pen and paper alone don’t give you as many options to keep your records as accurate and up-to-date as you’d like. Or perhaps you’re just ready to come into the tech savvy world of today.If you’re ready for that step, you’ll be happy to know that most programs (like Quicken) allow you to download transactions as soon as they become available online with your bank.These kinds of financial software programs also have many features that show you where your money’s going, as well as forecasting options that allow you to get a handle on where you want your money to take you. Forecasting can help you in determining a budget that will put you on the path to reducing your debt.While these options might not be first and foremost in your mind right now, you can focus on the simple aspects that will help you in running the day to day expenses of your home.How much do you spend on groceries? How much money do you need to set aside each paycheck to pay your bills? These are just a few of the questions that are easily answered using any number of the home finance software programs out there. And while there are a few free programs out there like Quicken Mint, you might prefer having your financial records available for you to work with, update, or review off-line. That’s why I recommend you pick a software that you can actually download to your hard drive or load from a CD you’ve purchased.Are you still asking yourself how using home finance software is better than your checkbook? If so, here are a few points to keep in mind.1. Software makes it easy to see all of your accounts and balances at one time.You’re able to get a listing of your loans (house, car, student loan, etc.) and balances. This is often handy when you’re working on debt reduction, but start to forget how much you owe already. It’s a real eye opening experience to see the totals on your debt when you’re just about to make that total get bigger by buying something for which you really don’t have the money on hand.2. You can download the latest transactions for all of your accounts.This also includes most loans where you have online access, 401 K or other savings plans, and credit cards. You’ll know if you’re about to go over your limits with one glance.3. Budgeting made easy.Most software has a built-in budging feature that guides you step by step through figuring out your monthly expenses and how to use that money you save on dining out to reduce your debt. You can also get visual charts (pie or bar graphs) that let you see where the majority of your money is going.These are just a few of the ways using a home finance software package for your home finances can work for you.