Incoming freshmen...no credit...and clueless (what a combo)

[CiscoRucinski]

I am starting college this fall -- in 13 days -- and still need to find a private student loan. I am waiting on my parents to determine if they will cosign my loan. They don't want anything to do with my schooling (kind of), and anything that can hurt there credit (I believe). They are willing to 'loan' me (I believe interest free) the full tuition amount for this coming year minus financial aid ($29,200 - $22,700 = $6,500). On top of that I will need $7,000 for me (rent, food, electricity...). I am willing to take out $3,000 of my own money making it only a $4,000 loan that I will need.

With the current credit crunch, I heard that it would be nearly impossible to get a loan without a cosigner (since I have no credit), My Dad suggest that I build up my credit (which I agree with) this way they don't have to cosign. He told me to take a loan out for the laptop that I will need. I don't think I would like that (extra loan, using extra checks, plus interest).

I was thinking along the lines of this: I get a credit card (or prepaid credit card) and only use it to pay off my tuition payments. My parents will be loaning me their money (and I might be getting some aid sent to me rather than the school), so I use the card to make payments, and pay it off once I am billed, since I will have all the money. I build up my credit, and receive some possible bonuses (cash back, etc...).

I know that something is wrong (or I am missing something) as in the title it says I am clueless. What do you think about this?

Questions: if I only use the card every tri-semester, will I be paying anything on the months that I make no payments (interest)? Interest accumulates on remaining balances only, right, so if i pay it off on time then there will never be interest? What fees are there? When do you receive bonuses like cash back? Should I go with the loan, Credit card, or prepaid credit card? anything else you think I should know?

[Jeanie]

You can always try for a loan first then apply for a student credit card if that fails. What you should have done was built your credit awhile before this was in plan. You could have started with department store credit cards which are so much easier to get. I would do the prepaid card last though.

Good Luck..

~Jeanie

[CiscoRucinski]

Thanks Jeanie for your reply.

I know that I will have to take out the $4,000 private student loan no matter what. I need a way to build up my credit (yes a loan would too, but I am looking for the best option, and as far as I see a credit card would be better; or no). By the way, hindsight is always 20/20.

I heard that using credit cards are the only way to get your credit score to its highest, so instead of taking out a loan for a laptop (which will be another loan on top of my $4,000 loan, and extra interest) I thought that using a credit card would be may best bet. Like I said before, I would have the money so there should be no late fees (penalties).

I'm I correct at saying that if I pay off the balance right away, I will not have any interest added? What about the other questions I asked in my first post?

Thanks in advance

[Jeanie]

If you pay your credit card off by the due date you will not have any interest rate stuff applied. That only happens if there is a balance still. In order to get rewards such as cash back, you will have to look for credit cards that offer this. If there are any other fees such as yearly fees it will be stated, just make sure you read everything! In my opinion, I would avoid loans and prepaid cards.

Good Luck!

~Jeanie

[CiscoRucinski]

Thanks again Jeanie, your the best.

I agree with you on avoiding loans, unfortunately I have to get one; I'll keep that in mind too with the prepaid cards.

[Jeanie]

GOOD LUCK!

~Jeanie