Credit cards carry a lot of responsibility. If not used wisely, interest rates and late fees can burden your finances. Students often times find that they need the use of credit cards but then discover that they cannot afford the associated interest rates. Finding the best interest rate for a student credit card can be daunting, but it is not impossible.
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If you are a student, or have a child going off to college, and are in need of a credit card, you may want to read on. It is not enough to be approved for a credit card. It is finding an interest rate that can be the challenge.
Students are usually on a very tight budget with limited income. Young adults who are trying to establish credit can be overwhelmed when trying to decide which credit card is best for them.
Using Your First Credit Card Wisely is Important
Starter credit cards are ideal for young people venturing out on their own as well as people who are trying to establish (or re-establish) their credit history. These credit card issuers are required to report to the three main credit bureaus. This means that your credit history will be reported to them, which will be the beginning of establishing your credit.
Being a student with no credit is better than being a student with bad credit. Having no credit will cause you to be assigned a higher interest rate than someone who has an established credit history.
Being a student with bad credit will cause you to have an even higher interest rate.
Using a secured credit card will help to establish your credit while keeping interest rates down. This is a credit card that requires the holder to put a certain amount of cash on the account, which becomes your credit limit. Credit unions offer this type of card to their customers as well. If you open an account with a credit union, you can request to use some of your balance as your credit limit on that credit card.
Banks offer unsecured credit cards to their customers. Beware though, they have higher interest rates and lower credit limits. But for students who have no credit, it could be a way to at least begin establishing a credit history. Pay the balance in full at the end of the month, and you will avoid those higher interest rates altogether while having the benefit of a credit card.
Use Your Credit Card Wisely
Consumers have a responsibility to repay their debts regardless of their age. Students need to be mature enough to handle the responsibility of managing the privileges that are provided by credit cards. Educate yourself about the rules and regulations surrounding credit cards so you can make an informed decision about which credit card is best for you.
By keeping your balance to an affordable limit and making more than the minimum payment each month, you will be able to pay less interest. The best way to avoid paying any interest at all is to pay the entire balance in full at the end of each billing cycle.
Students Under the Age of 21 Can be Approved for a Student Credit Card
Regulation Z of the CARD Act contains some jargon that makes it a little more difficult for people under the age of 21 to get a credit card, but it does not make it impossible. According to Forbes, as long as a person under 21 years old can provide an income that will enable them to pay the minimum payment each month or if they have a co-signer, they are eligible to apply for a credit card.
Credit Scores Help to Determine Interest Rates
Students do not usually have a credit score when they are first starting out on their own. But you must be aware that your credit score will be the determining factor in future credit card rates once you have established a credit history.
Keep track of your credit score. Consumers are entitled by law to an annual free credit report.
Visit AnnualCreditReport.com to request a copy of yours. Establishing credit is necessary in order to get the lowest interest rate you can. The higher you can make your score, the better.
Let the FREE credit card chaser find a credit card for you now!
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