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Using a Student Credit Card Responsibly:
- Protect Your Credit Report
- Pay bills on time and avoid late
fees.
- Keep track of all your charges and
keep receipts.
- Do not exceed your Credit Limit on
your credit line.
- Always avoid Over-limit Fees as they
are costly and might cause your credit
rating to decrease.
- Report change of address prior to
relocating, so you will receive all of
your bills immediately.
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Your Credit Rights
The Fair Credit Billing Act for consumers applies to
credit cards and can be used for:
- Billing errors on your account.
- Unauthorized use of your student
credit card account.
- Goods or services charged to your
account, but not received.
- Charges for which you request an
explanation or written proof of
purchase.
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*If your credit card is lost or stolen, you will not
be held liable for any changes made by unauthorized
persons.
Billing and Charge Disputes
- If you see an unauthorized charge on
your statement, write to the card issuer
within 60 days after the first
bill containing the disputed charge is
mailed to you.
- Certify mail your letter to the
address provided on the bill.
- Be very specific in your letter.
Provide your name and account number,
the date and amount of the charge being
disputed, and a complete explanation of
why you are disputing the charge.
- Keep a record of receipt to document
that your letter was received. You might
wish to send it by certified mail with a
return receipt requested.
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If you follow these requirements of receipt, the
creditor or card issuer must acknowledge your letter in
writing within 30 days of receipt and conduct an
investigation within 90 days. While the bill is being
disputed and investigated, you do not need to pay
the amount in dispute. The creditor or student credit
card issuer may not take action to collect the disputed
amount, including reporting the amount as delinquent,
and may not close or restrict your student credit card
account. If there was an error or you do not owe the
amount, the creditor or card issuer must credit your
account and remove any Finance Charges or late fees
relating to the amount not owed. For any amount still
owed, you have the right to an explanation and copies of
documents proving you owe the money. If the bill is
correct, you must be told in writing what you owe and
why you owe it. You will owe the amount disputed, plus
any Finance Charges that have been incurred. Read more
on
student credit resources.
When Your Debt Is out of Control
If you ever find yourself in a situation where you can't
make a monthly payment, notify your student credit card
issuer and work out a modified payment plan that reduces
your payments to a more manageable level. Be cautious
about turning to a debt counseling company to solve your
debt problems. Avoid paying such a firm in advance until
you find out what the company can really do. Before you
sign a contract, check out the organization with the
U.S. Better Business Bureau or with your local consumer
protection agency.
Counseling services provide assistance to individuals
having difficulty budgeting their money and/or meeting
necessary monthly expenses. Many organizations,
including credit unions, cooperative extension services,
family service centers, and religious organizations,
offer free or low-cost credit counseling
Choosing Student Credit Card Applications:
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Credit terms vary among issuers. When shopping for a
card, think about how you plan to use it. Do you expect
to pay your bills in full each month, or do you plan to
pay off your purchases over time? Consider the Annual
Fee, Finance Charges, balance computation method, and
whether or not there is a Grace Period for purchases.
Some student credit cards do not permit a grace
period for the amounts due if you use the Cash
Advance or Balance Transfer features, even if they
have a Grace Period for purchases. It's also a good idea
to look at the Credit Limit and how widely the card is
accepted, as well as the plan's additional services and
features.
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Annual Percentage Rate (APR) and Finance Charges
The APR (Annual Percentage Rate) is essentially a measure of the
cost of credit, expressed as a yearly rate. The card
issuer must also disclose the "periodic rate," which is
a rate applied to your outstanding balance to figure the
Finance Charge for each Billing Cycle. Some student
credit cards plans allow the issuer to change your APR
when interest rates or other economic indicators (called
indexes) change. Because the rate change is linked to
the indexes' performance, these plans are called
"Variable Rate" programs. Rate changes raise or lower
the Finance Charge on your account. If you're
considering a Variable Rate card, the issuer must also
provide information that discloses to you:
- That the interest rate may change.
- How the interest rate is determined,
which index is used and what
additional amount (the "margin")
is added to determine your new
rate.
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NOTE: Most credit card plans allow the issuer to "reprice"
your current APR if the account falls into poor standing
or becomes delinquent. Repricing is the act of
increasing the APR on your credit line.
Annual Fee
Some issuers charge annual membership or participation
fees. They often range from $25 to $50, and sometimes
reach as much as $100. "Gold" or "Platinum" cards
sometimes reach as much as several hundred dollars.
These fees may be charged whether or not you use the
credit card.
Transaction Fees and Other Charges
A student credit card may include other costs. Some
issuers charge fees if you use the card to get a Cash
Advance, make a late payment, or exceed your Credit
Limit. Often an issuer will charge a fee to transfer a
balance from another creditor's account to their
account. Fees are disclosed to you in your Terms and
Conditions as well as in your Account Agreement. It is
important that you read these documents in order to
understand your responsibilities as an accountholder.
Balance Computation Method for the Finance Charge
If you don't have a Grace Period or if you expect to pay
for purchases over time, it's important to know what
balance computation method the issuer uses to calculate
your Finance Charge. This can make a big difference in
how much of a Finance Charge you'll pay Ð even if the
APR and your buying patterns remain relatively constant.
Examples of balance computation
methods include the following:
Average Daily Balance: This is the most common
calculation method. The issuer totals the beginning
balance for each day in the Billing Period and subtracts
any credits made to your account that day. While new
purchases may or may not be added to the balance,
depending on your plan, Cash Advances are typically
included. The resulting daily balances are added for the
Billing Cycle. The total is then divided by the number
of days in the Billing Period to get the "Average Daily
Balance."
Two-cycle Balances: Issuers sometimes use various
methods to calculate your balance that make use of your
last two months' account activity. Read your agreement
carefully to find out if your issuer uses this approach.
This is the sum of the Average Daily Balances for two
Billing Cycles.
The Truth in Lending Act requires a lender to inform you
of the cost to borrow, so that you can compare the cost
and terms of credit offered by various lenders.
Your Brief Credit
Educational can continue...
There are many other subjects about students, learning
and credit cards covered in our weekly updated student
credit card articles. It's our blog and we touch on
subjects like being credit savvy, advantages of student
cards, a first view of the student credit card and why
it's different from a regular card, battling credit card
debt and more. Do you want to learn MORE about credit,
and discover tips with insight? Consider visiting our
student credit card articles
HERE.
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