Student credit card no credit

By buying in advance and then paying back in installments has become a way of our living and hence we can easily comment that Credit is a part and parcel of our life . Children in their teens and early 20s, use these cards, as a routine. The present generation which is growing up with video games, computers etc. is also catching up with debit and credit cards . They are generally referred to as Gen P or the plastic generation.

Children should learn to manage this side and the training should start well in time if we want them to be successful in life. Financial disaster is very depressing and the student looses the enthusiasm and confidence in himself once he has landed himself in a financial mess. Naturally no parent lets his child to face such a situation this warrants that the student learns the intricacies of financial pitfalls ; while he or she is still in the care of parents and is yet to face the cruel world of financial constraints , exploitation and being hoodwinked.

But credit is pretty much a necessity in the modern world. So the awareness as to how to handle credit is important, but it is not something that kids are likely to cultivate in school.All this has to be cultivated by their parents .

The requisite training should begin right at the school stage.

Middle school :

Right from this tender age children should be given the idea

about interest. They need to be told how the loan grows with compound interest .Even the idea about taking loans for things for which they normally dont have money to buy ,should be imparted to them . The concept of budgeting controlling and spending , in which normally ,at this stage ,they are the least interested , should essentially be instilled in them .

High school

This is the right time when the kid should have a bank account with a cheque facility .In this way they will learn how to write cheques etc.It is better if this account has an overdraft facility also. This will teach to keep the overdraft within limit besides giving the idea that all this is done after paying certain fee / charges .

The Cards :

Debit cards for students : Once the children are well versed with the bank accounts it is an apt time to introduce them to plastic money .Debit card which has a Master card or Visa card logo allows the child to effect withdrawls at ATMs and can also be used as Credit cards, the difference being that the charge is directly deducted from the account This student card is ideal to train them to use the plastic money without incurring any loan .

Prepaid student Credit Card :These cards are provided primarily with children in mind. The card is like any other credit card but here the payment is to be made by parent. The limit is chosen by the parent and after the limit the card stands blocked unless the parent allows the payment. This student card is the first step for the student to take things for which he doesnt have money .He learns the advantages of deferring the payments for a short period and also learns that he has to pay a fee for it besides being under a constant guard of the parents .This also tells him how the monthly reports go and how they are to be handled.

Low-limit credit card : Some parents opt to help their child apply for a real credit card, co-signing for an account with a Rs2000 to Rs3000 limit.. Though the company gives a new and unattached Credit card to the student , yet it is given against the guarantee of parents ..

Student Credit Card :At the College stage the student can apply for his or her own Credit card . The scrutiny by the Credit Card company becomes acute now and it helps if the student has a sound record of spending with her other types of cards earlier.This is known as credit history and student should try his best to make it a healthy one. This helps them later . For girls it is very essential that they try to get a higher limit by making a good credit history. In olden times when something happened to the husband or the marriage, they didnt have incomes and didnt have credit, But now Everybody needs to develop a good credit background specially the daughters. Student Credit card is like any other card except that the student is fully responsible for the repayments etc. The limit that is given to the student depends upon his own credit worthiness.If he has been steadyily paying off his instalments he will get a higher limit.

The minimum Payments :The proper management of paying back is a thing that must be taught to the students by parents. Only in very rare case the option of minimum payments should be used.

A new card holder often falls into this trap of making minm. Payments and goes on increasing the debt right upto the limit level and only then he realizes what mess he is in . The repayment becomes a real nightmare and one has to pay a very high rate of interest to wave off this loan. It is much better to take a separate loan for paying off the credit card payments. This can be learnt only by experience. In this the parents can take initiative to get the loan for their children as normally no bank will come forward to sanction a loan for them . Once they get the loan on their names and then feel the change in the amounts they are paying back , this can be a lifetime example to them that all is not over if they are sometimes caught in a loan trap .

Debt levels management

Right from college days a student should be taught to make the correct estimate of his total loans.. This makes you conscious of not taking loans for things not desperately needed. He will have to pay off the student loan that was taken for his studies ,he will like to furnish his apartment and even buy a car. Students should particularly be alive to the fact that no more than 20% of their net, after-tax income should go for all debt payments, If they have student loans and a car payment, thats pretty much then they cant afford to have any revolving credit at all.

Students using plastic in general will have to learn , like their parents , that credit card debt is bad and as far as possible be avoided to maintain a good financial health .

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