Elizabethtown College Students in Free Enterprise

Question of the Week:
"Is it worth getting a 'student' credit card?"

   Banks and financial institutions issue student credit cards because of the large market. It has been reported that more than 75 percent of undergraduates have at least one credit card, which are worth billions of dollars in spending power. Student credit cards are marketed differently and usually carry different credit terms and benefits.
   According to the Citizens for Fair Credit Card Terms, Inc.; signing up for your first credit card is the easiest way to establish credit if you use it responsibly and handle money wisely. The difference between student credit cards and other credit cards is that they allow students to hold a card without a job, income or a credit record. The only requirement is that the individual must be enrolled at a four-year college or university. Credit card companies have made their presence known on college and university campuses through tables with free giveaways and direct mailings.
   Since students may not have large incomes or jobs, they will be charged with higher interest rates. Research sites, like cardratings.com, offer comparisons between different cards in their rates, annual fees, benefits and other terms. An interest rate in the mid-teens is typical for first-time cardholders. One credit card company offers lower rates to students with higher grade point averages and those who pay on time. Some of the benefits associated with student credit cards are points or rewards at popular retailers. Unfortunately, only 21 percent of undergraduates pay off their balance in full each month. A cardholder should maintain a budget and stay within his or her spending limit to avoid paying high interest rates and fees.
   Tip of the week: A student credit card is a beneficial way to help create a credit history. A credit history is important when applying for mortgages, loans or more attractive credit cards.

Written by Elizabethtown College Students in Free Enterprise, a nonprofit organization that teaches others the principles of free market economics. Students, faculty and staff are encouraged to submit questions to campus box 1713.

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