For avoiding mistakes and taking the maximum benefit from student credit card, parents, intervention is very important. Parents can guide their children in using their credit cards properly without involving themselves into any financial lock or chaos. From choosing the right type of credit card specially the ones with low limit so that they may be able to use up low and keep the balance on the right track. Good credit cards may be those charging lowest or 0% annual charges and/or free offers, like free lunch voucher or a coupon for raffle.
Ways to maximize credit card benefits
1. Maintain your credit score as future prospect of student credit card users depends very much on how they use it. The credit score setting authorities consider those card users “credit risks”, who maintain a large balance by not paying their bills regularly. Such users are awarded low credit score and face higher financing rates in future when they opt for buying a car or getting it insured. In order to avoid such a situation it is better to keep your bills cleared through prompt cash pay backs instead of building up your balance into a huge loan.
2. Watch your credit limit and utilize the credit facility only to an extent that does not earn you a penalty. Use your credit only in case of an urgent need only. A good account is that which has a balance maintained at the level of less than 50% of available credit. So should be your account if you want to avoid risks.
3. Compound interest factor keeps increasing your balance even if you stop using your card, so it is advisable that you do not carry your balance forward or it will give you a lower than average credit score, building up trouble for you of facing high payments in future.
4. Less number of credit cards you use is also something that needs constant monitoring. The more you go after credit the more you fall into the category of those short of funds. The lesser is the number of your credit cards, the simpler and easier is your record maintaining and lesser is the chance for you to be categorized as an individual facing financial crisis. Again, to keep your credit scores on good level, you should better use limit the frequency of using you card.
5. Lowest possible interest rate should be the main idea when you are choosing between a numbers of credit card options. Higher interest rate adds to your monthly balance no matter how less frequently do you use your card. A credit card option that offers 0% initial interest rate may be the best option though at later stages it may turn out to be equally bad as any other credit card if not used within limits.
6. Cards offering bonuses or rewards are also a good choice. These bonuses are offered if you are using your credit card regularly, not suspending the activity for a longer time. These offers though are offset later in the form of high annual fee but don’t sound bad when offered. The annual fees should, therefore, be discussed ahead of getting a card.
7. Full payment of balance every month can save you from all the trouble mentioned above. If that cannot be the case then try and manage to make a little higher than the minimum required payment so that your account keeps from overloading.
8. Carrying along some cash while out on shopping is always a good idea as giving away money is always less easier than mere forwarding your credit card to the salesperson. Take along cash for daily use and leave the card home to save yourself from extra balance.
9. Prepaid cards can be a good option if you find it difficult to pay off you monthly balance and saves you from embarrassment. On the other hand how to meet emergency needs still remains a question. No chance of winning any reward or bonus is available in case you are using your debit card and leave the thought of improving your credit as well.
10. Debit cards are safer than credit cards as they save you from balance every month, BUT, if stolen, they can give you a actual hard time as your account may be wiped off and the card company will share no risk with you. No improvement in credit is also associated with debit cards though the case may be that you need it sometime in future.
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