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Advice For Using Your Student Credit Cards Wisely
Student credit cards are a great way to build credit for those who do not have a previous credit history. However, student credit cards can be double edged swords in that they can both help a student establish good credit, but student credit cards also make it possible for the student to destroy his or her credit rating in a manner that will cause problems for years.
It is important for parents of students who have student credit cards to discuss with their children about the seriousness of using their student credit cards wisely. They should understand that the student credit cards should only be used for emergencies or other parentally approved expenses. The students must understand that the balances on their student credit cards must be paid off as soon as possible in order to avoid incurring large finance charges.
Parents should also have a discussion with their child regarding the importance of maintaining good credit and how developing a bad credit score can make it very difficult for them to make large purchases in the future. A little focus on the responsibility of having student credit cards may help the student avoid potential problems.
It is no secret that it is almost laughably easy for students to obtain student credit cards. The advertisements are usually couched in language that makes it appear that the credit card companies make student credit cards so readily available so that they can magnanimously educate students on how to handle credit responsibly. While that is of course true, the truth is that student credit cards are great sources of revenue for the credit card issuing companies for a number of reasons.
First, students who are overwhelmed by the pressures of college life may occasionally forget to pay the bill on time or may not have the money to pay the bill when it is due. This means that the issuer is able to cash in on lots of late payment fees and finance charges. Additionally, issuers of student credit cards are aware that if the student begins to incur a troubling amount of debt that very often the studentís parents will help the student pay down the balance. This means that the issuers of student credit cards face less of a risk of loss revenue due to charge offs than they do with other types of credit cards.
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