KSL News and reporter Cleon Wall did a short little story on some of the new credit card laws and how these laws affect college students. According to the new law, credit card companies can no longer target college students under the age of 21. This is a great thing, believe me! My own college experience put me at 19 with three credit cards. Fortunately I only rang up about $1,000 and had great parents that helped me through the learning process.
The shocking thing about the article was BYU finance professor, Ned Hill, who was claiming this law was bad because now kids can’t start building credit early and now they won’t go get a job.
Quote:
“It prevents them from establishing a credit history. So, students have to be more energetic in getting a job so they could qualify to get a credit card on their own, or they could go on their parent's credit card,"
Did he really just say that? If building your credit is what you are worried about, there are plenty of ways to do this without going into credit card debt. I think credit cards are trap and should be avoided. Even rewards cards are worthless. The interest from your college credit card will be between 10 and 26 percent. Also to assume kids won't be motivated to get a job if they don't have debt to pay is stupid.
Odd comments by Mr. Hill, plus doesn’t this guy belong to a religious organization that says stay out of debt.
If you really are worried about establishing credit, do it this way. Deposit $100-$500 into Certificate of Deposit [CD] with your local financial institution. Then take a loan against the CD for the full amount, no credit check needed. The rate at most credit unions will be 2% (Far better than the 10-26% you will get with your college credit card). Make your payments on time and at the end of 6 months, you will have your original $500 back, no credit check by the credit union and 6 months worth of loan payments recorded on your credit report. Magically your credit report now shows—established credit! You can do this a number of times with much success and now very little risk. Granted your credit report will not be perfect (yet), but at least you’re not in credit card debt.
See the full report here: http://www.ksl.com/index.php?nid=148&sid=12269380
As always your comments are welcome.
1 comment:
Student prepaid debit card is a card that looks like a credit card and is accepted everywhere credit cards are accepted, but there is one big difference: the credit line does not extend to the paper. So that a student purchases a prepaid card, the money has been invested in the first tab. This money can come from many different sources. Students can invest in the card. Or the student's parents may choose to add money to the card. In fact, parents can usually set it as part of its supervisory work is added to a debit card each pay period.
how to eliminate credit card debt
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