Selecting a Student Credit Card
Every day, students on college campuses are being bombarded with credit card offers just like the rest of us. In fact, college students get five to seven credit card offers on average during their very first week on campus.
With all the offers for free gifts right in front of you as you walk around your campus or open you mail, you can easily find yourself in over your head. Relying on plastic before you learn how to manage credit can quickly go from a rush to a reality check. You could even find yourself in serious debt.
Many people, especially students, may not understand how credit actually works. It’s easy to be so busy focusing on getting through your college years that you don’t even consider how your credit spending can affect your future finances. In addition, careless handling of on-campus credit card offers can leave you open to identity theft.
It is ultimately up to you to make smart decisions when choosing your credit card. For one thing, you should limit yourself to only one initially. The truth is that credit cards themselves are not the problem. The trouble often begins with an individual student who carries too many credit cardsIf your parents have provided you with a card in case of emergencies, that one card is usually enough, especially if your name is on it along with your parents in order to establish your credit history. You really don’t need four or five credit cards.
When selecting the one ideal credit card, try to pick one that offers a low interest rate even after the initial sign-up period. Even without an established credit history, a student should be able to qualify for a reasonable interest rate. Many credit cards will offer you introductory rates of 0% for the first six to 12 months, but be certain that after that period the card will carry an annual percentage rate in the mid-teens or below. Avoid altogether any credit card with an APR over 20%, even if the initial rate is much lower. There are many internet offers available with student credit cards offering APRs in this range.
If you already have control over your expenses and can restrain yourself when using your plastic, you should consider a rewards credit card that provides incentives to match up with your spending habits. Reward credit cards may grant you with points for charging such student expenses as books, groceries, or gas. A rewards card may be ideal if you can pay off your card balance each month and avoid adding interest charges to your expenses. Be aware that even for students, there are many credit cards that do not charge an annual fee and offer a grace period of at least 20 days, which is important when planning to make those monthly payments.
Many credit card issuers are looking to make some easy money off financially naïve consumers, and college students are often an easy target. Certain issuers may promise a gift such as a computer, but then require you to keep a balance on your credit card. This means you will be paying interest, so you will actually be paying them for that “gift.” Students should always read the fine print associated with a credit card offer just as any consumer should before signing anything.
If you just don’t think that you can get control of your credit card use, it may be better to simply not get one. While it may be helpful to build a credit history while in college, it is more important to avoid building a bad credit history. A bad credit history earned during your college years can hang over you long after you graduate. More and more often, credit histories are used not only to get credit, but to get employment. A good credit history is a sign of reliability, and while no credit history may leave you with a question mark, a bad one will leave you with a liability.