Personal Finance. Student Loans Debts Do Not Go On Your Credit Record.
Every time you apply for credit, for example a credit card or a loan, the lender will request to see your credit history from a credit reference agency. The information they hold is so detailed that there’s really no need for us to fill out that long application form, because within a fraction of a second they can see all they need to know from Experian, Equifax or Callcredit, the three main credit reference agencies. You would be very surprised to see just how much they know about you.
Banks, building societies and other financial institutions providing credit have been passing on details of your financial transactions to the credit agencies. Every time you apply for a credit card, every time you miss a mortgage repayment it gets noted. They know whether you pay the minimum or the balance each month, they even know details of your credit limit on each credit card. They also look to public records, the voters’ roll and the public register of court actions because that is where all county court judgements are listed. It all happens automatically, and when your credit history is requested, the computer will provide a statistical analysis of your financial habits and provide an assessment of your suitability. It enables, the industry argues, lenders to make an accurate judgement about whether they should lend you money or not.
However, there is one piece of financial information that the credit agencies are not allowed to access, and that’s the student loans. Despite the industry’s remonstrations to the government, nothing has changed, and they are not allowed to access the information. The reason? Student loans constitute a debt to the taxpayer, they were not funded by commercial business.
Before September 1998, the student loan system worked like this: once graduates were working and earning the national average, which was 15,000 at the time, they had to repay their loan on a monthly basis by direct debit. 59,000 of those pre-1998 graduates still haven’t started repaying their loan, and each has on average a debt of 2,750.
In September 1998, the student loan system changed, and the system remains the same to this day. Now, repayments are taken directly at source, straight from the salary in the same way as national insurance and income tax. This method has been a lot more successful.
The lending industry is not happy about the student loan situation, their main argument being that they need to know, when considering an application for credit, if the applicant has extra financial responsibilities. The introduction of top-up fees resulted in increasingly large student debts, and as the post-1998 loans have to be paid off at a rate of 9% of the graduate’s income once it has reached 15,000, it is a large portion of income to lose.
The Association Consumer Credit Counselling Service made the following statement: Knowing whether a young person has a student loan and whether it is being paid back, is useful. So they are in agreement with the lenders.
The Citizens Advice Bureau is also keen to have the information made public, because they feel that graduates could be taking on too much debt, and if lenders could see their student loans, they would ensure that graduates are not given the ability to borrow beyond their means.
However, the Department for Education and Skills is showing no signs of wavering on its decision to keep individuals’ debts to the Student Loan Company private.
For the foreseeable future the situation will remain the same and student loans information will be inaccessible to the credit industry.
Paying Your Debts Off With A College Student Credit Card
Entering college is both exciting and daunting since its the start of your journey to adulthood. College actually opens up a lot of opportunities like finally being able to live independently away from your parents and then being able to budget your own monthly allowance sent by your parents. Most parents open a credit card account in their childrens name or provide them with a second card on their personal credit card account. Parents do this in anticipation of some future emergency that their children might meet or if ever they failed to send their childrens monthly allowance at least the card can help their children in purchasing for the meantime some of their needs.
Another financial assistance available for students is the student credit card which is issued in their own names.
What is a student credit card?
It is a type of credit card that is designed for high school and college students. These cards function in the same way as any credit card issued by any financial institution. However, they have a few restrictions.
Some of the restrictions are as follows:
1. Some issuers require for a parent or guardian to co-sign meaning that the students parents must agree to be the guarantor in case a student fails to repay part or all of the outstanding credit card balance. This is advantageous in some point since parents will have the control over the limit of available credit to be given to their children.
2. A much lower credit limit is provided to students. Issuers are aware that students have very limited sources of funds that is why they also offer a lower credit limit. Aside from that, students dont have yet any credit history so issuers dont have any basis in terms of their capacity to pay off debts. A low credit limit is provided to get students started building their own credit scores and the same time limiting the risk of loss of the issuer of the credit card.
3. The interest provided for student credit cards are much higher. This is the issuers way of decreasing their risk of loss. The higher interest provides a way for credit card issuers to spread the losses over the entire student credit card population.
Why student credit cards are important?
Student credit cards offer great benefits if and only if responsibility is practiced in the using the credit card. A student credit card can help teach students responsibility and money management. Learning the benefits of building a good credit rating is important to help students understand the significant role that credit history will play in all their future endeavors.
Before signing any credit application or contract, a student needs to understand that they are fully responsible for paying the bills. Here are some rules of credit management that aims to guide you in avoiding future credit card problems:
1. Try to read carefully all information written on the application most especially the fine print because some of the important points of the application are stated there.
2. Before you sign for a credit card try to consider other options like debit cards. For debit cards, money are directly deducted from your checking account so cant spend beyond your deposited amount.
3. Be sure that when you apply for a credit card you will be able to repay the debt or else you will just submit yourself to an ever increasing accumulation of interest charges that will haunt you even after you graduate. Remember that when it comes to credit cards, its just not possible to run away from your debt.
4. For your sake please avoid impulse shopping which tends to max out your credit card.
5. Make use of your credit card only for emergencies. If you are planning on using your credit card to pay off your spring break vacation then be prepared to pay the price because its sure going to be higher than any waves you experienced on the beach.
6. To avoid temptation, it is much better if you refrain from always carrying your credit card. Bring it only with you if there is any important monetary emergency.
7. Always try to pay your bills early so you get to keep other charges to a minimum. Aside from that, some banks provide discounts for early payment that provide additional savings for you.
And lastly by using your student credit card wisely can help you in establishing a strong credit history that can lead to good mortgage rates and lower rates on some of the future loans which you are likely to apply for like car loans, housing loans and other types of loans.
Networking for College Students and Grads: Top 7 Steps You Can Take Now
If you had to grow your own food, would you wait until you were hungry to plant your seeds?
Most certainly you would not! Why? Because of the laws of nature. When you plant seeds, you have to nurture them and wait for them to grow. There is nothing humanly possible that you can do to accelerate the process. You water them, make sure the soil is rich, and allow time and nature to do the rest.
So why are you waiting to plant the seeds that can positively affect your career and the rest of your life? If you want to build a strong, integrated network of contacts and friends, you must begin planting the seeds of your career now. If you wait until youre hungry to start planting those seeds, then youll starve before the seeds mature.
As simple as it may sound, networking can be a painfully frustrating effortespecially when your goal is to find immediate employment. Tasks such as building contacts or collecting names and phone numbers theoretically take only a few simple steps. But building relationships requires more than passing and collecting business cards. It isnt the occasional phone call, the holiday greeting card, or remembering names of family members youve never met. You cannot possibly build as many deep, lasting relationships in your life, as you may be able to cram names into your address book. Yet one good friend is often worth more than dozens of names of people whom you barely know and have little in common with.
In essence, I am speaking of quality over quantity. Its an old theme, but a valid one. It may sound overwhelming, but remember your objective. Here are the top seven steps you can take today that will have a great payoff tomorrow.
1.Volunteer
Volunteering is one of the most effective ways to build relationships with people. It runs much deeper than the informational interview. Your involvement with an organization bonds you to other members or volunteers within that same organization. By working together to reach a common goal, you are automatically building relationships. These individuals will be able to discover your talents, your values and your character. These are things that cannot normally be accomplished through a single 30 minute meeting.
2. Intern
This will provide you with an excellent opportunity to gain hand-on experience in your chosen field for either credit, for a nominal salary wage, or, if youre lucky, both. Many national and local organizations, especially in the nonprofit and communication areas, have intern programs. There are many books which details thousands of these opportunities, including Petersons Guide to Internships and the Last Guide to Internships Youll Ever Need, which is available for free from CollegeRecruiter.com. All you need to do to receive the book is to register for free at http:www.CollegeRecruiter.com .
3. Get a Part-Time Job
I dont mean the flipping burger type of job. You can reap the rewards from working in an environment that youre planning to spend most of your career in. It is also the perfect opportunity to get to know and connect with professionals within your chosen field.
4. Adopt a Mentor:
No matter where you are in your career, it is always good to have a mentor. This is especially important in college, when youre at a critical point in your career development. By associating yourself with someone already out in the field, you can learn all kinds of insights that you wont get in the classroom:
* You can observe the person in action.
* You can learn how he or she developed into the position they currently hold. You will hear about the pitfalls as well as the victories.
* You can learn of the various types of positions within the field you wish to enter.
* You can gain a clearer direction for yourself from your mentors guidance in academic choices and extracurricular activities.
* From your mentors connections with other people, he or she may be able to find new opportunities to serve and learn.
*The mentor can help you be sure of your career choice decision.
5. Get to Know Your Teachers
The fact is that many of the professors you have right now can be invaluable sources of advice, guidance and networking. Teachers and professors have associations and relationships in the business world as well as the campus community. However, they dont go around announcing this extra perk to the class. In fact, they are usually very discreet about their choices. You must go to themon your own! Your assigned academic advisor can be a great person to start with, especially if you feel anxiety about approaching someone else.
6. Join Professional Student Organizations
Many professional and volunteer organizations have student chapters, especially on our nations larger campuses. If no student chapters exist, you can usually apply for a student membership in a professional organization at a reduced rate, and thus attend meetings normally held off-campus. What an opportunity to meet influential people.
7. Think of Who Else You Know
Through your intimates and family members, you probably already have a strong network in place. The only problem is that it is asleep. That is, most of the people in your network may not necessarily see you in terms of the career for which you are preparing. Instead, you are to them whatever is the nature of your relationship: the niece or nephew, the client, the patient, fellow club member, or the person next door. If you have a network that is a sleep, you must wake em up and let them be aware of all you can do.
In this short read, I have given you quite a bit of work to do. But remember, youre investing in your future. Every relationship, every deed, every time you go out and meet, greet and serve the needs of others, you are planting seeds. Take the time to nourish these seeds and you shall be successful in your career and in life.
Networking And Volunteering Is Key For Career-Minded. College Students And Graduates
College students and recent graduates seeking to get a foot in the door in the working world can gain valuable experience through volunteering. The key to success is in thinking beyond traditional jobs to find volunteer opportunities and resources that will jump-start a meaningful and fulfilling career.
Volunteering experience can be a significant asset to the resumes of college students and graduates. Many recruiters now look for volunteer service on resumes as a telltale sign of strong moral character, good work ethic and proven leadership skills. Not only does volunteer experience show potential employers that a candidate is a responsible citizen of the world, but it also provides networking opportunities, a critical component of the business world that may be a new concept for those in college or recently graduated.
Kiwanis International, a global volunteer service organization, and Circle K International, a Kiwanis service leadership program for college students, created the Career Contacts program and job board with the link between volunteering and networking in mind. Designed to promote career development by encouraging college students to interact with Kiwanis members, the program offers opportunities for students and recent graduates to introduce themselves to key decision-makers across a wide variety of professional fields. Kiwanis members support the program in many ways; as career mentors, hosts for a “day at the office,” participants in a campus career fair or mock job interview, or just by being listed in the business directory.
“We created this program in hopes of educating today’s youth on the process of job searching and providing them with opportunities vital to success in today’s working world,” said Casey Keller, director of Circle K International. “Career Contacts is an excellent resource for both potential employees and employers to find prospects with similar, service-oriented interests and backgrounds.”
For other ways to build a circle of professional contacts and gain valuable volunteering experience, consider the following tips:
• Join a service organization or start your own local club.
• Actively seek out volunteer opportunities, job fairs and professional networking events related to your field.
• Ask to job shadow a professional contact met through volunteering.
• Utilize volunteering and networking Web sites to meet likeminded individuals.
• Participate in your school’s local chapter of a larger professional organization.
Keeping control of your money is one of the hardest lessons we have to learn as new college and university students. For many of us it is our first time away from home, and the first time we have to be truly responsible for all the financial affairs in our lives. Some get a handle on money matters faster than others. That’s just the way she goes. But if you’re not really all that sure where your money is going each month, here are a few things you may want to consider.
I. Avoid Temptations
If you have a particular weakness, and we all do, just stay away from it. If you love shopping, stay out of the malls. If you’re a tech-head, stick to once a year upgrades. Nobody says avoiding temptation is going to be easy. However, it is a must if you want to save money. When you want to give into your temptation, this is the time to use your “allowance”. Your allowance can be a set amount for ’special’ items, or just a big jar where you put your loose change at the end of every day.
II. Credit Cards
If you have a credit card, use it only for emergency. Although they are really handy, credit cards are dangerous and possibly very damaging to your financial future. Credit cards (and in particular student credit cards) have very high interest rates. If you are only able or willing to make the minimum monthly payments then you will very quickly end up with a HUGE amount of debt because of the interest. The really bad thing is that you will also have to pay interest on the interest you owe. So, credit cards are good in a pinch, but should never be used as an extension of your cash.
III. Credit Card Interest
If you have credit cards and your credit is in good standing, you should take the time to call your credit card company, and ask for your interest rate to be lowered. It is just as simple as that. Most people have no idea they can even do this so they never make the call. Just ask the rep for a better rate on your credit card and they will take care of it for you.
IV. Financial Consulting
Many financial companies, community colleges and even churches offer classes on how to manage money. In some cases the courses are free, but often they cost around 35 to attend: it is money well spent. Another choice you have is consumer-counseling services. This is a great if you are getting into debt trouble. The counselors will work with your creditors to lower your balances, interest rates, and establish workable payment schedule that you can manage.
Most college students are eager to begin their lives as independent adults. Part of this journey is learning how to be financially stable and responsible with a student credit card. If you are looking for a good deal on a student credit card and you are a big fan of your particular university, you might checkout the MBNA credit card for students. You can visit the website at http:www.mbna.com and click on the card section of the site. There you will find information about the various credit cards offered by MBNA and how each one compares to the other. The student credit card is listed separately and you will be able to apply for and accept credit card online all in one visit to the website.
MBNA Credit Card
One of the most attractive features of this card for students is the fact that they offer a wide variety of designs to suit each student’s taste and collegiate affiliation. MBNA allows the consumer to select from a number of college logos so that the credit card reflects the university that the student attend.
The following is a list of all the colleges available:
Arizona State University
Auburn University
Clemson University
Trustees Of Dartmouth
Florida State University
Georgetown University
Indiana University
Iowa State University
Loyola College In Maryland
Michigan State Alumni Association
Ohio State Association
Penn State Alumni Association
Purdue University
St Johns University
University Of Texas A&M
University Of Arizona
University Of California At Los Angles
University Of Delaware
University Of Illinois
University Of Miami
University Of Michigan
University Of Missouri
University Of North Carolina
University Of Pennsylvania
University Of Southern California
University Of Texas
University Of Utah
University Of Wisconsin
Villanova University
Once you choose the college you wish to feature on your student credit card, you proceed to the application page. Here it is very important that you scroll to the bottom of the page and read the information about rates and fees before you accept credit card online.
Card Features
When you select the MBNA student card, you are using the exclusive card of your university. This is a great way to show your support for your school.
Every MBNA credit card comes with fraud protection. This means that if your card is stolen or lost and used without your knowledge or approval in a purchase, whether online or at a retail location, MBNA will not hold you responsible for these unauthorized charges.
Also, a convenient feature for students who are frequently on the go is the fulltime access to account information online. You can access your monthly statement, schedule payments online, and check your balance from any internet access around the globe. If you have trouble remembering to pay your bill on time, go to the website and set up an automatic withdrawal from your checking account so that you never miss another payment and never have to worry about late fees accumulating on your card and accruing interest.
Overall, the MBNA credit card is a great deal for college students establishing their credit.
Credit card for college students has high annual fee and interest rates. Student credit card does not require a co-signer, since the credit limit is low and if the limit is breached you must have a co-signer. This co-signer will be responsible for the payment. Student credit cards are available online, and one can choose according to the needs of the credit card.
Leading student credit cards offer 0% APR up to six months on balance transfers, cash advances and purchases, enabling you not to default on your credit card payments. But before using a card one must be sure of the terms and conditions. The APRs for student credit card are above normal rates but if one chooses to pay the balance before the grace period, then that is sufficient. Some credit cards have no annual fees and allow you to manage the account online.
Choosing The Right Card
You may come across student credit cards while searching online. Once you get the list, compare them against each other and look for a card with low interest rates and no annual fees. It is always better to have a regular student credit card. Once you get hold of a credit card at least once.
How To Use
Different student credit cards offer many multiple offers and students should select a credit card with no annual fee and low interest rates. The credit limit should not be exceeded. The payment should be done in the same month. Once you manage to have a regular student credit card, you can apply for other credit cards. The proper usage of credit card can keep under good rating; else you will be bankrupt in the young age and will be ruined.
Often, when people are browsing through the different types of credit cards available, they come across the category of “Student Credit Cards.” Many people, however, are not sure what a student credit card is or why they are even offered. Generally, these cards are meant to be credit cards for college students, although they can be used with high school students as well. To better understand what student credit cards are all about, it is helpful to take a look at student credit card basics.
Who can use a student credit card?
While student credit cards are generally marketed toward college students, anyone can usually apply for one of these cards. Some cards, however, will ask the name of the college the student attends and will require verification in order to receive one of these cards.
Why does the credit card application ask for the name of the college?
Companies offering credit cards for college students realize that college students generally do not have any type of established credit history. A limited credit history makes it more difficult to receive a credit card. On the other hand, these companies realize the importance of having a credit card while in college. The fact that you are attending college demonstrates to the credit card company that you are responsible and you are looking toward your future. This gives them a small reassurance that you might also be responsible for taking care of your debts.
What is a secured student credit card?
A secured college credit card is really more like a debit card. With these cards, you (or your parents) deposit money onto the card ahead of time. The amount of money you can spend with the card is limited to the amount of money that has been placed on the card.
Why would I want a secured student credit card?
Secured college credit cards are beneficial for parents who want to give their college-aged child an allowance while at college. In addition, there is no risk of accumulating a debt that you cannot repay.
What are the drawbacks to secured student credit cards?
Secured student credit cards usually have a large number of fees. Often, there is an enrollment fee. This fee can be as much as 100. There are also usually annual fees or monthly fees. In addition, there is a small fee every time money is put onto the card.
What kind of interest rates do student credit cards have?
Secured student credit cards do not have an interest rate since you are not actually borrowing money from the credit card company. Unsecured student credit cards that extend a line of credit, however, often have a higher interest rate than other credit cards. This is not because the card is a “student credit card.” Rather, it is because the cardholder has a limited credit history. Therefore, the interest rates are comparable to other credit cards offered to people with a similar credit history.
Do student credit cards offer rewards programs?
Some college credit cards do offer special reward programs. As with other credit cards, however, student credit cards with special reward programs usually have an APR that is higher than those without reward programs.
Why should I get a student credit card instead of a traditional credit card?
There are credit cards available for people with a limited credit history that are not specifically meant for college students. There is nothing wrong with getting one of these cards. Student credit cards, however, sometimes have a lower interest rate than other cards for people with a limited credit history because the fact you are attending college demonstrates a certain level of responsibility. In addition, student credit cards often have benefits associated with them that are meaningful to college students, such as discounts on school supplies.
In countries like USA, Canada, and the UK where college education is expensive, a student credit card proves to be handy in the event of a huge cash crisis. Student credit cards are useful in situations when students desperately need money to pay off their expenses. Major credit card companies like American Express, Visa, and MasterCard offer student credit cards with various incentives. Many credit card companies offer student credit cards with low interest rates and good offers.
Choosing a Good Student Credit Card
Any credit card company that issues a student credit card with low or no interest is good enough. Look for the best student cards – those that lend money at a cheaper rate and for a longer term. Most credit cards offer funds starting at the rate of 19% and higher for students. A personal bank loan can even be in the range of 6%, provided you are eligible for it. Several on-campus sources like student unions, departments, and the university itself along with some private sources, offer scholarships and hardship bursaries.
Many students prefer to own more than one credit card which has its own pros and cons. However, some nave students pay interests that are as high as 20%. They need to be educated on how to negotiate a good rate, opt for a 0% balance transfer etc. In short, this card, like any other, should be used intelligently and economically.
Tips to Use a Student Credit Card
1. Plan, plan, and plan your budget – Spending can be controlled by planning a budget, thus preventing bad credit. A credit card statement is the best way to decide your budget. List all the weekly and monthly expenses like food, books, bus fare, etc. and prioritize your expenses.
2. Stick to the budget plan – use the card only for unavoidable expenses. Plan the budget well in advance and follow the planned weekly and monthly expenses as you decided. Pay the balances on every statement, in time, and prevent debts from building up.
3. Use your credit card for major purchases – Use the credit card only for big buys and long-term purchases like furniture and books. Some credit cards for college students charge higher interest rates. Hence, to prevent debts and a bad credit record, credit cards for college students need to be used carefully.
4. Avoid overuse – Use the card very cautiously. Avoid overspending, for example, buying CDs on the internet and spending on beers and sodas for friends.
5. Avoid any help from your parents – Understand your responsibilities and control your spending habits. Use available financial resources judiciously. Parents should stop paying the debts of their wards and teach them to use credit cards intelligently. This also helps in encouraging their children into taking their own responsibilities. Parents can also put a limit on the card to curb splurges.
Effect of a Credit Report
Many employers check the credit report of fresh graduates. Good credit history always helps in getting good job offers. Keep the credit record debt-free before appearing for job interviews. A better alternative to a credit card for a college student is a prepaid debit card. This keeps you out of debt because it sets limits on your spending.
Some parents oppose the idea of providing their children with student credit cards. But these cards help a student learn to be a good manager of available finances. Credit cards for college students help students in obtaining practical experiences of managing available finances. Parents should educate their child about the risk involved in using credit cards. Make them aware of the threats of a debt, even before they enter college. To be on the safer side give them a prepaid debit card to help them avoid a crisis. Therefore, student credit cards actually help the growth of a young individual into a mature one.
