Best Credit Cards for Students

by Shelton on October 10th, 2015

filed under Student Credit Cards

It wasnt long ago that college students went back to school and in addition to buying books and sweatshirts on campus, they were offered credit cards–and the chance to plunge into debt before they even began earning an income. Thanks to the Card Act of 2009, credit card issuers are no longer allowed to advertise on campus, or offer the promotions that often enticed young people to use the cards.

But there are still potential pitfalls. Credit cards, like cell phones, are ubiquitous; every teen needs one. And just as with cell phones and internet access, it is smarter for parents to use these as teaching tools, monitor their use, and protect their teens from abusing credit, while explaining how valuable credit can be.

Here are five ways to get started.

1. Start by checking your teens credit report online with her. There should be no credit at first – unless the childs social security number has been used fraudulently. Show her that her use of the credit card will be reported to the credit bureaus. Explain that anything bad, such as late payments, will stay on her credit report for 7 years. That could impact her in many ways, including the cost of auto insurance, a landlords decision on whether to rent an apartment to her, or even whether she gets a job, since employers often pull credit reports. Go to www.annualcreditreport.com to get the report.

2. Add your teen to your card as an authorized user. Open a new credit card account (with a low credit limit) with your teen. Then be sure to set up online access so the two of you can regularly review spending online. Make sure the credit usage is being reported under her Social Security number as well as your own. You will have the incentive to monitor her spending – because your credit could be impacted!

3. Get a student credit card. Go to this link on Bankrate.com for their report student credit cards. Youll find that major card issuers, including Discover, Capital One, and Citibank, have created cards especially for students with rewards features that include free FICO credit scores, and – in the case of Discover, a $20 cash-back feature for each year the students grade point average is above 3.0.
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4. Get a secured card. Many card issuers offer these VISA and MasterCards, which require a savings deposit in the issuing bank. The credit limit is the amount of the savings deposit. Use the card regularly, and pay in full and on time, and those credit habits will be reported to the credit bureau, starting to build a good credit report. Secured cards can be used like any other card, allowing you to withdraw cash at ATMs or pay for purchases.

5. Consider VisaBuxx – the card built for young people and parents. The card is linked to the parents account so it can automatically be refilled when the money runs out! Meanwhile, both parent and student can instantly view all transactions online. So if the student calls home for a refill because books were too expensive, Mom can see that a lot of money went to the campus bar and grill! Go to www.VisaBuxx.com for links to issuing banks.

Consumer credit expert, Gerri Detweiler, of Credit.com has some excellent tips for choosing a student credit card, and this years list of the best student credit cards at this link. And students can also get their credit score free at Credit.com.

And a final thought, now that youve enabled your teen or college student to use credit and start to manage their own financial future: Let them learn the whole lesson! Dont be quick to bail them out when theyve reached their limit. Suggest they get a part-time job to earn extra money to pay down the balance. If you kids learn those lessons early – when they are painful but less costly – they will have a much easier time in later life. And thats The Savage Truth.

5 ways to start your kids off right with credit cards

by Shelton on September 27th, 2015

filed under Student Credit Cards

2. Add your teen to your card as an authorized user. Open a new credit card account (with a low credit limit) with your teen. Then be sure to set up online access so the two of you can regularly review spending online. Make sure the credit usage is being reported under her Social Security number as well as your own. You will have the incentive to monitor her spending — because your credit could be impacted!

3. Get a student credit card. Go to Bankrate.com and search for special student credit cards. [http://www.bankrate.com/credit-cards/student-cards.aspx] Youll find that major card issuers, including Discover, Capital One and Citibank, have created cards especially for students with rewards features that include free FICO credit scores — and, in the case of Discover, a $20 cash-back feature for each year the students grade point average is above 3.0.

4. Get a secured card. Many card issuers offer these VISAs and MasterCards, which require a savings deposit in the issuing bank. The credit limit is the amount of the savings deposit. Use the card regularly, and pay in full and on time, and those credit habits will be reported to the credit bureau, starting to build a good credit report. Secured cards can be used like any other card, allowing you to withdraw cash at ATMs or pay for purchases.

5. Consider VisaBuxx, the card built for young people and parents. The card is linked to the parents account so it can automatically be refilled when the money runs out! Meanwhile, both parent and student can instantly view all transactions online. So if the student calls home for a refill because books were too expensive, Mom can see that a lot of money went to the campus bar and grill! Go to www.VisaBuxx.com for links to issuing banks.

And a final thought: Now that youve enabled your teen or college student to use credit and start to manage their own financial future: Let them learn the whole lesson! Dont be quick to bail them out when theyve reached their limit. Suggest they get a part-time job to earn extra money to pay down the balance. If you kids learn those lessons early — when they are painful but less costly — they will have a much easier time in later life. And thats The Savage Truth.

(Terry Savage is a registered investment adviser and the author of four best-selling books, including The Savage Truth on Money. Terry responds to questions on her blog at TerrySavage.com.)

(c) 2015 TERRY SAVAGE DISTRIBUTED BY TRIBUNE CONTENT AGENCY, LLC

Five tips for you when signing up for a credit card

by Shelton on September 25th, 2015

filed under Student Credit Cards

Young college students arent exactly credit card happy these days. But credit card issuers are rolling out some attractive deals that are designed to put more plastic into backpacks.

If youre a college student shopping for a credit card, its possible to find some better rates and terms than cards that were marketed to college students before card regulations went into place in February 2010, according to an analysis by CreditCards.com.

Bihar’s great leap forward

by Shelton on September 24th, 2015

filed under Student Credit Cards

How we plan to continue my state’s transformation by developing its social sector

Home to about 17% of the world’s population, India has witnessed commendable transformations since Independence.

Agricultural revolution transformed us from being chronic importers of grain to net exporters; per capita incomes increased significantly and gave birth to a sizeable middle class; life expectancy doubled; literacy saw a fourfold improvement. We suddenly became home to globally recognised corporations in the areas of pharmaceuticals, IT, automobiles, etc., and increasingly found a voice in international politics commensurate with our size and population.

However, growth in our social sector has not necessarily kept pace with our economic growth. The last two decades especially have seen this gap widen and there is an urgent need to bridge it. A disconcerting issue is while our per capita incomes have increased substantially over the last two decades, more than half our population continues to struggle for basic amenities in life. Twenty crore Indians are yet to see electricity in their homes; only 30% of rural households have access to piped water; and 65% of small villages do not have access to all-weather roads nearby.

This narrative is lent further complexity and challenge when we realise that within India itself regional records are so varied, and there exist states who have seen significant rewards accrue out of their concerted efforts towards social sector spending. We are all witness to the exemplary growth that Kerala, Tamil Nadu and Himachal Pradesh have demonstrated.

By pursuing aggressive social policies in areas of education, health, and by making resolute efforts towards putting in extensive social infrastructure such as roads, drinking water, sanitation, and more, these states have found a place as leaders in HDI and quality of life in the country. Furthermore, social development in these states is only adding to the robustness of their economic growth.

In the last 10 years, Bihar too has witnessed unprecedented all-round growth and prosperity. After decades, the conversation about the state has acquired a positive tone and tenor. A stable foundation has been laid on which a brighter and prosperous future of Bihar awaits to be built.

Driven by the ideal of ‘development with justice’, my government has focussed on ensuring governance, rule of law and effective delivery of basic services. Bihar has outperformed the country on most socioeconomic indicators, at 17.99%, decadal GSDP (gross state domestic product) growth rate has been at an all-time high.

Per capita income has grown, so has agricultural, industry and service sector GSDP. There has been a fourfold increase in power supply. More than 36,000 of our 40,000 villages are now almost completely electrified. Bihar’s road network has doubled over the past decade. The state has achieved enrollment ratios of 99% in schools and immunisation rates of up to 60%.

We have brought down infant mortality at a rate faster than the national average.

I feel the time is now opportune to trigger new interventions that will usher in the next level of development in Bihar. ‘Nitish Nishchay – Viksit Bihar ke 7 Sutra’ will create better opportunities for youth of the state and secure their future, further empower our women, and build social infrastructure to provide universal access to basic amenities for each and every citizen of the state.

The following is a brief summary.

By creating more opportunities and improving employability of our youth, Aarthik Hal, Yuvaon ko Bal will secure the futures of the crores of youth of Bihar and make them self-sufficient. The scheme will provide unemployment allowance for all between the ages of 20 and 25 to the tune of Rs 1,000 per month which can be availed twice, for a period of nine months. The state will guarantee student loans for anyone who has passed class 12 by way of Student Credit Cards. It will also include a Rs 500 crore venture capital fund for entrepreneurs, free Wi-Fi and internet service for all colleges and universities and a hi-tech employment exchange in each district where 1.5 crore youth would also be trained in languages, communication skills and computer literacy.

To further the objective of women empowerment and to make them more self-reliant, 35% of all state government jobs would be reserved for women under Aarakshit Rozgar, Mahilaon ko Adhikar.

And with Har Ghar Bijli, Lagatar no one will live in darkness any more as remaining villages and habitations will be electrified in two years. To secure clean drinking water for every citizen of Bihar, Har Ghar Nal ka Jal will make piped water available to all homes. All weather roads will reach each and every doorstep under Ghar Tak Pakki Gali-Naaliyan.

To make Bihar healthy, hygienic and free from open defecation, Shauchalay Nirmaan, Ghar ka Sammaan will ensure that each household will be equipped with a toilet and afford dignity to women and their families. Avsar Badhe, Aage Padhein will expand opportunities for technical and higher education within Bihar.

From current estimates and future projection Bihar will have more than Rs 4 lakh crore in internal resources for planned expenditure, out of which Rs 2.7 lakh crore will be earmarked for these initiatives should the public bless me with the mandate. It is my belief that Nitish Nishchay will afford people the basic facilities important for a good quality of life and create conditions that would truly result in sustainable and inclusive growth.

Credit card deals are out there, but college students should look past hype

by Shelton on September 22nd, 2015

filed under Student Credit Cards

What should you look for when shopping for a credit card for college? Here are five tips:

1) Dont get wowed by the signing bonus.

Yes, some credit cards are offering whats seen as a signing bonus to college students.  The BankAmericard Cash Rewards Credit Card for Students, for example, has an online deal for a $100 bonus, if you make at least $500 in purchases in the first 90 days of opening your account.

How are you going to spend $500 on that card? Maybe, youre thinking youd charge your tuition?

Nope, wont work here. I went online to the Bank of America site and asked that very question via an online chat.

The online reps answer: Tuition fees wouldnt be counted. Only purchases made at retail store or online are counted.

Dont be tempted to spend more than whats within your budget to get a bonus.

2) Pay attention to the limits of 0% offers.

Student credit cards are offering some introductory rates of 0% on cards. But some of those intro offers can range from six months to 12 months. Many of the 0% offers are on purchases; only a few offer 0% on balance transfers.

When you get busy on campus with term papers and tests, its way to easy to forget that your 0% rate is no longer available at spring break.

3) Credit unions could have great rates for students, too.

Banks are trying to build long-term relationships with college students with some of these deals. But its wise to shop at credit unions, such as those connected to various universities, to see if you could get a lower credit card rate and a better deal.

The University of Michigan Credit Union, for example, has a Visa Platinum OptimUMcard with a rate of 8.9% thats offered to all credit union members. The rewards card version of this card has a rate of 12.9%. There is no annual fee and no charge for balance transfers.  But there is a 1% fee to convert foreign transactions into US dollars.

4) Pay attention to fees and rates.

Some cards marketed to students do not have a penalty APR, meaning your annual percentage rate wont go up for missing payments. But there might be other fees. Discover It Chrome for Students, which does not have a penalty interest rate, will waive your first late payment fee. But after that, the late payment fee can be up to $35.

You want to review potential late fees, as well as interest rates.

Rates on some cards could be variable rates and set to go up after the prime rate heads higher. Its not a small point, especially since most economists expect the Federal Reserve to boost rates in the next few years.

The Capital One Journey Student Credit Card lists a rate of 19.8% but its a variable rate that would go up with the prime rate. The card does have a credit tracker to help students monitor their credit score, as well as other tools to help students use credit wisely. It also offers 1% cash back on purchases, plus an extra 0.25% cash back if payments are made on time.

Andrew K. Johnson, a spokesman for GreenPath Debt Solutions, a nonprofit credit counseling agency, said too often college students wont shop for interest rates on credit cards. Instead, theyll take whatever is offered. But its easy for debt to build when rates are higher and when students dont effectively manage their money.

5) A wide range of interest rates can be given on student credit cards.

Your friend might qualify for super-low rate of 11% or so on a student credit card, but you might get a rate of 19% or 22% on some cards.

The Citi ThankYou Preferred Card for College Students, for example, offers a range of rates of 13.99% or 18.99% or 23.99% on purchases depending on your creditworthiness. Again, those rates will vary with the prime rate. The card has a 0% intro rate on purchases for seven months from the date of opening the account. The penalty APR is up to 29.99%.

The keys to building a strong credit score are to keep credit card balances low and pay bills on time every time for a very long time, said Schulz at CreditCards.com. Experts say its best to sign up for mobile alerts to stay on top of when the bills are due, as well.

The No. 1 job for anyone with a credit card is to pay your balance off as soon as you can, Schulz said.

Contact Susan Tompor: stompor@freepress.com or 313-222-8876. Follow Susan on Twitter @tompor. 

The Student Loan Questions Politicians Still Need to Answer

by Shelton on September 13th, 2015

filed under Student Credit Cards

For the most part, what we’ve heard so far isn’t all that new. Take for example Sen. Marco Rubio’s (R-Fla.) and former Governor Martin O’Malley’s calls for universal income-based repayment plans, Sen. Rand Paul’s (R-Ky.) advocacy for tax-deductible college tuition, Sen. Bernie Sanders’ (I-Vt.) desire to reduce interest rates on federal student loans and former Governor Jeb Bush’s enthusiasm for online courses and for-profit institutions.

Then there are certain concepts that some (probably) hope will be viewed as examples of their courage to think outside the box.

Senator Rubio is stumping for so-called human-capital contracts, where wealthy individuals “invest” in students whom they believe have promising futures (as determined by their choice of school, major areas of study, academic performance and so forth) in exchange for a percentage of their career earnings. Senator Sanders wants to institute a tax on specific Wall Street transactions to cover the cost of tuition for in-state public colleges, while former Governor O’Malley has in mind a forced price reduction as a starting point.

Certainly, higher-education affordability is a legitimately hot-button matter for just about everyone: the 20 million students who are enrolled in two- and four-year colleges and grad schools; those who are funding their own educations; those who are still paying off their loans after having left school; parents who are bankrolling or backstopping costs; and taxpayers who are left holding the bag when government-sponsored loans end up uncollectable.

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The anxiety level for students is high.

Ohio State University recently published a National Student Financial Wellness Study involving students from 52 public and private four- and two-year colleges and universities. Of the nearly 19,000 students who participated, 72% report feeling “stressed about [their] personal finances in general,” of which 60% are concerned about “having enough money to pay for school.” With good reason: 48% expect to owe more than the current national average of $30,000 upon graduation.

Student loans, however, aren’t their only worry. Fifty-seven percent of the survey’s respondents reported having one or more credit cards (presumably for other education-related expenses), of which less than half are willing or able to pay the monthly balance in full.

Now, some might say, “It’s their own damn fault,” because in the US, at least, higher education is a voluntary undertaking. But none of us come out of the box with fully formed credit-management skills. It’s a learned behavior. That is, provided it’s effectively taught.

Indeed, the Ohio State report goes on to cite an earlier American Savings Education Council survey, in which more than two-thirds of respondents said they had never attended personal-finance classes or workshops in high school; nearly three-quarters in college. As for receiving personalized guidance, two-thirds said they never had any of that, either.

Is It a Matter of Financial Education?

Although the ASEC survey was unclear about the extent to which these resources were readily available to the respondents at the time, the question is: Does enhanced financial-literacy education make a difference to those who really, really want a degree from a select school and are willing to pay the going rate for that?

In a recently published staff report, researchers at the Federal Reserve Bank of New York prove a direct correlation between increased federal financial aid (in the form of grants and loans) and higher tuition rates for students attending pricy mid-level private schools and out-of-state public institutions. Specifically, the researchers determined that 55 cents of every Pell Grant-dollar increased the sticker (gross) price of a given school’s tuition; 70 cents for subsidized federal loans and 30 cents for unsubsidized loans (note that subsidized and unsubsidized loans charge the same rate of interest, following the passage of the 2013 Bipartisan Student Loan Certainty Act).

What I find most troubling about all this is how the availability of credit has turned higher education’s fundamental value proposition on its head. It’s no longer how much a college degree is worth. Rather, it’s how much money you can borrow to pay for one.

Which brings me back to this politically inspired college-affordability one-upmanship.

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Let’s Approach the Issue Differently

Whether the idea has to do with the venture capitalization of higher education (I could say indentured servitude, but I won’t), the impossibly complex matter of individually managing a trillion dollars’ worth of income-based repayment plans or enacting new taxes to pay for in-state attendance, all the candidates have talked about thus far is how to pay for however much the schools elect to charge. I’d much rather hear their views on the following four concepts:

  1. How to encourage an orderly consolidation of this vastly overbuilt network of public and private education institutions to eliminate operational redundancies and reduce tuition prices.
  2. The feasibility of reallocating the roughly $164 billion the government spends each year on grants and loans to covering the average annual cost of in-state tuition at the nation’s public colleges and universities.
  3. How to hold all schools financially accountable for unacceptably low outcomes (nearly 50% of college students fail to complete their undergraduate studies within six years) and high cohort default rates. They took the money. It’s time to give it back.
  4. How best to use that financial recovery to offset loans that are irretrievably defaulted, effect a pro rata reduction of existing obligations and cover the administrative cost of restructuring every single dollars’ worth of student loans that are currently on the books so the interest rate reflects that which is currently available, and repayment durations are extended so the monthly payment burden is reduced.

For those who crave an opportunity to demonstrate thought-leadership on this very pressing matter, here’s a chance to do just that.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

More on Student Loans:

  • A Credit Guide for College Graduates
  • How to Pay for College Without Building a Mountain of Debt
  • Strategies for Paying Off Student Loan Debt

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    Capital One Journey vs. The Discover it for Students

    by Shelton on August 6th, 2015

    filed under Student Credit Cards

    Its vital that college students build their credit history while learning sound practices for managing credit cards. Thankfully, there are a number of credit card issuers that offer products specifically for students to achieve these goals. The Capital One Journey and the Discover it for Students are two of the leading student credit cards. Lets see how they compare:

    Capital One Journey

    The Capital One Journey card gives students the opportunity to build their credit while earning some cash back. Cardholders receive 1% cash back on all purchases, plus an additional 25% bonus on the cash back earned each month when cardholders pay on-time.

    Customers begin with a modest credit line, but are eligible to receive a larger credit line with the Credit Steps program after making their first five payment on-time. Other benefits include access to Capital Ones Credit Tracker app which includes a free monthly credit score, and a what-if simulator to let you monitor your credit and predict where it is going.

    Capital One cards come with other features such as 24-hour travel assistance services, extended warranty coverage, and auto rental insurance. Cardholders can also set up free account alerts via text, email, and phone. The standard interest rate for purchases is 19.8% APR, and there is no foreign transaction fee or annual fee for this card.

    Discover it for Students

    The Discover it for Students offers young cardholders some rewards and benefits of the standard Discover it card. Cardholders earn 5% cash back on up to $1,500 spent each quarter at featured categories of merchants, and 1% cash back on all other purchases. Points can be redeemed at any time  and for any amount as statement credits, direct deposits, or even for purchases at Amazon.com.

    Furthermore, Discover has a limited time offer that is valid on all accounts opened before July 31st, where it will double all of the cash back earned throughout the year. So long as cardholders keep their accounts open and in good standing, they will have all the rewards earned after one year doubled.

    The Discover card also offers a host of other features such as automatically waiving cardholders first late payment fee, having no penalty interest rate, and 100% US-based customer service. In addition, Discover offers customers a free FICO credit score each month on their statements, online, and on their mobile app. Finally, the Discover it card offers the Freeze It feature which works like an on/off switch when you need to pause the ability to make new purchases for any reason, such as if your card has been misplaced, or if you just want to take a break from credit card use.

    Other standard cardholder benefits include a purchase protection policy, extended product warranty coverage, return guarantee protection, and price protection. When traveling, cardholders receive baggage delay insurance, 24/7 travel assistance, and an emergency roadside assistance program that charges $69.95 per service.

    New cardholders receive six months of interest free financing on new purchases, followed by a standard interest rate of 12.99%-21.99%, depending on their credit worthiness when they applied. There is no annual fee for this card, and no foreign transaction fees.

    Choosing the right card for your needs

    The Capital One Journey card features a very simple rewards program that even provides an additional incentive for making on-time payments. The Capital One offer also stands out because it features an automatic credit limit increase after you make on-time payments for your first five months as a cardholder. In addition, Capital One is part of the Visa network, which is more widely accepted overseas than Discover. While college students might not be regular international travelers, this can be an important feature for those who study abroad, or just take a backpacking trip over the summer.

    The main advantages of the Discover it card are the ability to earn as much as 5% cash back, as well as its customer friendly policies. The Discover card is widely regarded as having excellent customer service, and cardholders tend to rave about how well they are treated. But beyond those subjective impressions, Discover tied for the highest rank in JD Powers 2014 Customer Satisfaction Survey. And it backs up these achievements by not having a penalty interest rate and automatically waiving cardholders first late fee. While most card issuers will waive a late fee upon request, customers will typically have to make the uncomfortable telephone call to request it. Finally, six months of interest free financing can be very valuable, so long as cardholders do use this feature to save a little on interest, and not as a way of incurring more debt.

    Bottom line

    College students and their parents should be very careful to choose the best credit card for their needs and use it responsibly. By considering both the Capital One Journey vs. The Discover it for Students, they can choose from two of the best cards available.