How to Manage a Student Account Share-Secured Credit Card

• Why carrying a student card can be a smart decision
• How to make your card work for you

Given the damage that misuse of credit cards can cause, you may wonder why Space Coast Credit Union offers share-secured cards to students starting at age 15. It's simple: the sooner you learn how to manage credit, the better off you'll be when you are living on your own and facing the barrage of credit offers that will come your way daily.

Used correctly, a credit card is a good way to establish credit, as well as a convenient means of payment. However, it is important to educate yourself on using credit cards responsibly.

When you - and your parents - agree you are ready to step into the world of credit, you can start with an SCCU share-secured credit card. At age 15, eligible members can apply for a share-secured credit card with a joint account holder who is a parent or legal guardian.

Your Primary Share Savings Account will be used to secure your card, and you'll need to have an amount on deposit that at least matches your credit limit. It's wise to start with a low line of credit-like $300. Access this helpful link for specifics on opening an SCCU student account share-secured credit card.

What you should know before opening any credit card account:

Q. Why not avoid the whole issue and use a debit card?
A. Purchases made on a credit card build credit history; debit purchases do not. Opening a credit card account and managing it wisely will help you build a good credit history, which is essential for future financial success. A variety of people and businesses (e.g., financial institutions and other lenders, insurance companies, rental agencies, landlords, even potential employers) will make decisions affecting your future, based on your credit history. The rate you pay for almost any loan will be based on your credit history - and that includes the rate on credit cards. The better your history, the lower the rate you pay. That's why it's so important to establish a positive record.

TIP: One of the little-known aspects of credit scoring is that your score is influenced by the length of your credit history.  Lenders look for 5 to 7 years of history in granting the best rates on loans.  Starting your credit history at age 15 means that you can be eligible for a low rate much earlier than if you get started at age 18 or later.  The benefit of this early start will become clear when you decide to finance your first car or first home, and don’t need a co-signer or a huge down payment to get a decent rate on a loan.

Q. Aren't all credit cards about the same?
A. NO. Have you ever seen all the fine print in those "You're Approved" card offers that come in the mail? The next time an offer arrives, why not curl up in a comfy chair and read it. Study a few, and you'll start to see the potential disaster that lurks in all that faded out miniature type. For example:

• High annual fees
  
  
• Incredible interest rates - as high as 26.99%
  
  
• Interest rates that rise sharply after an introductory period
  
  
• Little or no "grace period" on purchases
  
  
• Two-cycle billing, which can increase your finance charges if the bill is not paid in full at the first billing. Interest is retroactive back to the date of purchase
  
  
• Steep late fees
  
  
• Rate hikes if you ever pay late
  
  
• Fees to transfer balances to the card
  
  
• Reward programs that you are unlikely to ever use. Card companies assume that only a fraction of participants will ever redeem the rewards they earn
  
  
• High credit limits. Keep in mind that even if you don't use all of your credit, any credit line you have will show up on your credit history as potential debt! This could affect your ability to be approved for a loan you really need, such as an auto loan or mortgage. If you ever need to borrow a large amount of money, there are more sensible alternatives than revolving a credit card balance

• SCCU cards feature a 25-day grace period on purchases
  
  
• Interest rates are reasonable and do not spike up after a short "introductory" period
  
  
• Your credit card statement is included with your other account statements, making it easier to manage your card account
  
  
• Choose from a variety of payment options
  
  
• Manage your account online and make payments easily from another SCCU account
  
  
• You can earn a down payment on any vehicle financed with SCCU through our free Smart Shopper Rebate Program. If you begin earning your rebate at age 15, you could have $1,500 accumulated by the time you are 20
  
  
• You can donate part of your rebate to a school-related team or club through our Education Donation Program
  
  
• Your card can grow with you. As your needs change, you can apply for an SCCU card that is not share-secured. Having a good credit history will help you get approved

Q. Where can I learn more about how credit cards work?
A. Check out this other helpful link.

The information on this page is for educational purposes only. SCCU is not engaged in providing estate planning or other advice. Please consult with a competent estate planning professional regarding any specific estate planning questions.