It was less than 60 years ago in 1951 where the first version of a credit card appeared when inventor Frank McNamara created the Diner’s Club Card. This paper wallet sized card was intended for consumers to pay off their restaurant bills on a monthly basis which therefore made it a charge card. Then about 50 years ago in 1958 Bank Of America released the first bank issued paper credit card called the BankAmericard. They distributed about 60,000 unsolicited cards in Fresno, California. The card was the first of its kind that gave the consumer the choice of when they wanted to pay back the charges on the credit card.
In 1959 American Express decided to jump in the mix and differentiate themselves from the pack by issuing the first ever plastic credit card, which was the American Express Card which is still widely popular today. They touted that plastic cards were more durable and could hold up better to frequent usage. Then in 1968 they diversified their offering and came out with the American Express Executive Card which catered to the more affluent heavy spenders. This Gold card became a status symbol and anyone who was anyone during the time was sure to have one. Soon after more competition jumped into the market with the premier of the Master Charge Card which we know now as MasterCard. The name was changed in 1979 but their classic logo has remained virtually unchanged.
Credit Cards continued to gain popularity which is why another competitor came in 1984 which was the Chase Visa Card. One of the key reasons that companies wanted to get into the space was that consumers were carrying larger and larger amounts of debt. New comer Discover card came out in 1986 and the co-branded card started to appear in 1989 with the Visa/NFL card. Then in 1997 the first student credit card came out which was the University of Delaware MasterCard. Credit cards continue to change forms with customizable cards and variations like titanium, platinum and diamond. Now we will just have to wait and see what the next big change in credit cards will be.
When you get your first student credit card you have the opportunity to learn good spending habits and proper use of credit. It will also help start your credit history and build your credit score which are both extremely valuable to your future. These factors will help determine the type of interest rates you will get when you need a loan for a major purchase like a house or car. If you use your student credit card correctly and do not treat it as if it is free money, then you will have a much better financial future.
One smart rule to follow is to only use your student credit card as if it were cash that you have to spend which means you can afford the item. If you do not follow this simple rule then you run the risk of accumulating lots of college student credit card debt that will be increasingly difficult to pay off. Another rule you need to follow is to not just pay the minimum payment. Since your credit card is basically a loan it has an interest rate associated with it and if you only pay the minimum payment, then it will be extremely tough to pay down the debt since the money will mainly go towards interest. If your student credit card spending does get out of control then do not cancel your card as it will hurt your credit score. You need to make sure you stop using it and create a plan to pay off the debt before you use the card ever again.
Use Automatic Payments or Utilize Online Banking
If you happen to be bad at remembering to pay your credit card bill each month then it may be smart for you to set up automatic payments with your bank and card issuers. This will help save you from missing payments and accruing late fees as long as you always have enough money in your bank account to cover the payment. You still need to try and pay more than the minimum payment even if it is automatic.
Another option if you are more disciplined is to use online banking so that you can set up a payment amount you can afford each month to automatically go out right after you get your bill in the mail. This will still make it easy for you to pay your student credit card but give you the flexibility to change the amount you want to pay.
Focus on Multiple Dues Dates
Having more than one student credit card often means payments at different times of the month. This means you need to be careful about your money management so that you always have the funds needed to pay your bills. If you are having trouble juggling dates you can try and contact one of your card issuers and see if they can change your payment date which they sometimes will accommodate.
Make Smart Spending Choices
Credit cards should not be viewed any different than cash unless it is a true emergency and you need your card for something. Treating cards like cash will ensure that you do not make purchases with money you do not have. You always have to remember to live within your means and make smart choices about what you buy. One of the best ways to do this is create a budget so you can keep track of where all of your money is spent.
If you have not heard one of these calls then this is a warning to watch out for: Robocalls that claim they can negotiate lower interest rates with your credit card companies. Many people have decided to become part of the Do Not Call lists but despite their efforts these calls continue. These automated calls can come at any hour and the pre-recorded message will often say something like “There are no problems currently with your account; however it is urgent that you contact us concerning your eligibility for lowering your interest rates to as little as 5.9 percent”.
What they do not say is the part that should provide you with an immediate red flag because they claim they are from something generic like “card services”. What this means is that it is not your credit card issuer and they would never contact you in such a manner. The Better Business Bureau has had hundreds of complaints about these companies because people get confused and think that it is from their credit card company. The way these companies work when you do contact them back is to offer you their services to help lower your interest rate for a one time flat fee. In many cases they do not end up doing anything to help and even if they do help it does not mean you cannot do what they do yourself. So if you are having trouble with your interest rates on your credit card and making payments then call your card issuer and explain your situation and your commitment to pay the debt. They will often lower your rate temporarily but that may be enough to help you pay off the credit card debt.
Compared to the first quarter of last year, the delinquency rates on credit cards have experienced a minor increase. Due to the recent decline in the economy many consumers are faced with tough decisions on which bills to pay. Unfortunately it seems that credit cards are falling low on the list and not getting paid because other bills are a higher priority. During the first quarter of 2009 the rate in the United States rose to 1.32% for consumers who were at least three months behind on paying their bills. This is up approximately 11% from the previous year which was at 1.19%.
Unemployment has been a huge factor in this increase as consumers are really struggling to get by in some parts of the country. The hardest hit areas tend to be the states that have also had increased foreclosures due to the huge dip in the real estate market. If this overall trend continues it could be trouble for major credit card issuers. Companies like Bank of America Corp., American Express Co., and Discover Financial services have to eventually write off the debt that consumers do not pay and that would be yet another hit to their bottom line which has already had a rough last couple of years. On top of the economic situation these credit issuers are also struggling to figure out how to create more revenue because they will soon be faced with the legislation that just passed regarding credit card fees and interest rates.
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