6. How can you tell if a credit card company is giving you a good deal?

 

Before signing any contract or application, the terms, interest rates and hidden charges should be understood by the student. Cards that make students pay annual fees on top of the interest rates should be avoided. Students should also look for cards which offer interest-free grace periods provided that they are able to pay during a certain period of time.

 

7. What is the role of the parents when it comes to their children's student credit?

 

Parents should encourage their children to spend money wisely and teach them to handle debt before they start college as much as possible. Some credit card companies offer to issue an extension card for the child of their client. There is even a new plan wherein students are given credit cards and parents can refill it with money, so the students will be able to make cash withdrawals of charges depending on the amount of money their card has. Parents should make their children realize that as much as possible, credit cards should only be used for emergencies - that divine faux fur coat slashed 70% off its price is not considered an emergency.

 

8. Is taking a cash advance a good idea?

 

Cash advances should be avoided. Not only will you pay interest from the time of withdrawal, cash advances will leave you with high paying interest rates with no grace period to speak of. There is often also a cash advance fee.  Before you know it, you will be in a really big financial crisis should you start making cash advances a habit.

 

9. Is it worth it to use credit cards in paying for small amounts so that the points will accumulate and I will be entitled to nicer gifts towards the end of the month?

 

Sure, there are credit card companies that offer gifts depending on the number of points the client has accumulated, but paying using plastic for just about anything should be avoided because you will still have to pay interest rates. It is not worth it to get a nicer gift in the end but accumulate fees and pay interest for little things like a can of Diet Mountain Dew or a pizza.  Using a credit card for everyday expenses is a bad habit to form.

 

10. What are penalty policies?

 

Should a client fall behind on his payment, credit card companies usually charge sky-high penalty rates and cancel their low-rate offers, so it is important to ask about this before signing up.  It could also trigger universal default penalties which could increase interest rates on other cards!

 

Students should know how to manage finances and should be aware of the consequences should they miss payments of their credit cards before they go to college and apply for credit. It is the key to a financially stress-free life in the future.

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