Student Loans Vs Credit Cards

by : Jerry Leung

When you are in need of money to cover your expenses in college. You basically have a few options. You will not need to worry much if you have the cash to pay of. On the contrary, if you do not have the cash, you may consider either getting a student loan or paying by your credit card.

So, what are the differences between getting a student loan and using the credit card? In fact, the first difference will probably be the interest rate. No matter you are getting a federal loan or a private loan, you will need to pay less interest. The interest rate of using your credit card will be a lot higher than that of the student loans.

Besides, if you are getting a federal loan, you do not need to repay immediately, you will start repaying about half year after your graduation. And in the case of private loan, in most cases you will only need to pay the interest before you graduate. However, this is not the case of credit card. You will have to start repaying the grace period. The grace period usually lasts for not more than 60 days.

So, it seems that it is very unwise to use your credit card when you are still in the college. Yet it is not totally true. You should start getting a credit card and use it so that you can start building a good credit score.

You may probably ask when you should use your credit card. In fact, you should use your credit card when you have the cash. Here, it does not mean that you have the cash to payoff everything. However, you may have a part time job. When you get the salary and you want to use them to buy a pair of new shoes, then you may use your credit card to purchase. However, you should keep the cash so that you can payoff it within the grace period. By doing this you can start building your positive credit score. And on the other hand you may even enjoy some benefits from the credit card company such as cash rebate.

Both student loans and credit cards have their own advantages, the key is that you should know how to choose between them. You should also learn to use them in the right way so that they will be some very good tools in your college life.