SIFE Sense: credit card basics

Given the high prices of tuition and the common lack of hard cash, students often find credit cards a viable way to deal with funding problems. Credit cards are by their nature, designed to be an easy way for people to pay for expensive items over a period of time. The major problem is that many students who do get credit cards are unable to pay the monthly bills on time and end up paying more over a longer period of time due to interest rates.

There are options for students looking for a credit card. Student credit cards are perhaps one of the best ways to begin dealing with credit. 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.

However, student credit cards can have some drawbacks. 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' 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.

It is always important for students with credit carts to remember how much they can pay back from their spending and not just how much they can spend. Credit can be a great help in starting a successful financial future, but students must always remember to control their credit and not have their credit control them.