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Student Credit Cards

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When parents send their students off to college, teaching them money management skills is important. One way to help students learn this valuable lesson is to give them a credit card. Obviously there have to be guidelines about how and when to use the card, especially if the parents are paying the bills, but there are several ways to approach the process.

Student Credit Card Options and Cost
Banks and other credit lenders have begun to offer specialized credit cards for students. They want to gain new customers that, they hope, will be loyal to their cards for the long term. At the same time, they expect that college graduates will be able to pay their credit bills. Having and successfully managing a low interest rate student credit card can help the student to learn how to budget and manage debt.

Consequently, there is a wide range of cards from which to choose. Some credit offers include cash back options. Others offer their cards with no annual fee, and most offer 0% liability on unauthorized purchases. Recognizing student interests, some cards offer points that can be exchanged for CDs, DVDs, and movie tickets. Interest rates may be a little higher than average, so it is important to compare options before the student selects a card.

One excellent choice for students with limited funds is a prepaid card. There are no interest rates on these cards, and credit history is usually not an issue. Most of the prepaid cards can be reloaded when available funds become low. Unlike traditional credit cards, prepaid cards do not help the student to build credit, but they can offer the student the same purchasing options.

Establishing Credit Early
One of the best ways to ensure that a student will have the credit card buying power he or she needs is to begin teaching him or her the necessary skills while the student is still in high school. This can include providing the student with a credit card with conditions such as maintaining a part-time job or learning how to balance a checkbook monthly.

Credit cards can be of real help to students in the first few days after they get to college when other funds may not have been distributed. As many parents already know, getting settled in a dorm room or apartment costs money. There are always things to buy, and the money flows out quickly. And just when living space is settled, the student needs to buy books and supplies for courses.

Parents provide a second card on one of their accounts for the student to use or they can help the student apply for a credit card of his or her own. Another options is a prepaid card and, depending on the parents' financial circumstances, the student may be able to repay his or her parents when college funds become available.

Using credit as a means to supplement college loans can be a big help, especially during the student's freshman year. Parents should carefully monitor the student's progress in successfully managing credit during that time. When a student obtains and carefully manages a credit card in the first days of being on his or her own, it sets a great precedent for long-term credit management success.

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