Student credit cards can be a big help for people starting college. There are many expenses related to starting school, such as books, room and board, etc. and a student credit card can make the difference between being able to purchase what is needed and not being able to attend classes. Of course, it is necessary to understand that you will eventually have to pay for any purchases made on student credit cards so do not overextend yourself with purchases that you cannot afford.
Choosing The Best Student Credit Card
Choosing the right credit card is very important for students especially. That is because most college students have not yet begun to develop their credit histories. Your credit score is going to be important to you for the rest of your life and will determine what kind of car you drive, the place that you live, and even how much you pay for something as small as a cell phone. Your first card choice can affect everything from this point forward.
Student Credit Card Interest Rates
One of the things that you need to consider in your student credit card is the interest rate. If this is your first card ever and you have never purchased anything on credit or finance before, then you can expect to pay a higher interest rate than someone with good credit would. That is because, with no credit at all, a credit card company cannot determine what kind of risk that you may be. As such, they will provide themselves with extra protection by increasing your interest rate. The rate, however, should not be as high as someone with poor credit.
In order to negate a higher interest rate on your student credit card you have two options. The first option is to purchase a secured card. This requires a cash deposit that the lender can draw on, in case you do not make the payments.
Secured Student Credit Cards
The benefit of a secured card is that, while any money you spend with the credit card is money you put directly into it, the card company you use will report your use of your credit card to the credit score companies as a positive, which will work towards increasing your credit score. You also have the option of making payments into the card, rather like a checking account, until you reach a specific minimum, usually three to five hundred dollars. A downside exists for those who need actual credit to pay for some necessities; they may not have the financial availability to build up money into a card and then use it for expenses.
Using A Co-Signer For A Student Credit Card
Another way to ensure that you get a lower interest rate on a student credit card is with a co-signer who has good credit. Usually, for a college student, that co-signer will be a parent. It must be understood, however, that the co-signer is just as responsible for the payments made on the card as the primary cardholder is. In addition, all use of the card will appear on the co-signers credit report, just as it will on the primary holders.
Student Credit Card Fees
Before you fill out an application for a credit card, there are some things that you want to look. Outside of the interest rate, which will be determined based on your credit score; you should also consider if there are any annual fees associated with the card. If you have no established credit, you may not be able find a card without associated annual fees; however, different companies require different fees and some will offer to eliminate the fee once you have established a payment pattern of a year.
In addition, you will want to review any other fees that the credit card company will add to your card. For example, if you miss a payment how much will the interest rate increase? Some companies will charge you a fee for increasing your credit line, whether you request the increase or not. You want to make sure that you read all of the small print associated with a card before you apply for a card, you do not want any surprises after you start using the card.
Student Credit Card Bonuses
Some added things to consider is what kind of bonuses that your credit card offers. If you are attending school away from home, you might want to consider a card that offers reward points for flying. If you aren’t interested in that you should look for cash back offers so that your spending can benefit you over time. Reward cards can be very beneficial, as long as you don’t let yourself be pulled in by rewards you don’t really want or need, yet pay for.
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