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[06:23:05 AM Monday, September 01, 2008]
Student Credit Card at the Final Year - Should You Close It?It's estimated 91% of students keep at least one credit card account open by their final year. Irrespective of what payment history they have built by the time, positive or negative, all of them wonder if they should close the card once they graduate. It is logical you change one product for another that is better fit for your new spending capacities and lifestyle. But closing your student's account is a double-edged sword, as claimed by financial experts. It might also be a hassle to get a new plastic if you carry big balances, let alone damage to your creditability as an adult. If you're close to the final year with still a student plastic in your pocket, learn how you can dispose of it to keep your payment records in good standing. It's not a secret that student cards tend to charge higher APRs and lower credit limits. Quite a fine deal for a young person to teach him/her responsible money management. But once a student graduates and gets that well-paid, prestige job, the array of lowest rates, no fees and rewards offers, online and offline, become a great temptation. Financial advisors do encourage you to apply for an "adult" card, but not until you make sure you leave the old account open. The status of the payment records with this particular student card is not really that significant. The key is to keep the credit history growing. Once you close the account down, your credit rating might get a hit. Surprised at how the closed account might affect you as an adult? Remember, the credit records you graduate with are the major financial information your future employers, landlord and other lenders will look at making their decisions. Of course, the best strategy is to graduate with positive payment records. You do not need to take that excessive debt into an adult life where you'll have to deal with car lenders and mortgage companies. If you have bad debts, the fact of an open account will not help. So, it makes sense to focus on all of your still due bills and pay them off before you leave college behind. With some issuers, paying on time is not only easy but beneficial. Some cards of Chase Bank maintain a program to help students avoid getting stuck in debts. Its "karmic" points reward students for paying on time and can be redeemed for t-shirts and other items at a required amount. If, in your final year, you still carry some balances which accumulated due to making only the minimum monthly payments, you are at a great advantage to get a graduation upgrade. The upgrade is usually realized through a balance transfer, an option to move your remaining balances onto a new and better credit offer. Again, there's no point in closing the old account. Even if you find a more appropriate deal and get approved, just leave the student card open to keep the history. A balance transfer is a student's quick and smooth way into the market of lowest interest rates, best fees and paying rewards. The last year is not only the time to take the finals on core subjects but also on credit card management practiced all this time. |
