Good Credit is Essential
Building good credit is essential for the student just starting out. Because of this, it is important to choose a student credit card that fits their needs but also allows them to use sensibly. Remember that a student credit card will set the tone for a lifetime’s credit responsibility. There are certain criteria to look for in a student credit card: annual percentage rates, rewards, redemptions, features, and fees.
Annual Percentage Rate
You will usually see this abbreviated as APR, the annual percentage rate is the percentage charged as interest on the balance of the card. Obviously, the lower the APR, the less interest you will owe on your balance. Paying your balance at the end of every billing period will enable students to use the card without accruing high interest fees. APR’s range anywhere from 11.15 to 21.99 percent. As a general rule, most student credit cards come with low initial credit lines with a higher APR.
Rewards Programs
Student credit cards aren’t known for providing the most enticing perks or rewards, but there are some cards that allow the student to accrue points that can be redeemed from anything from cash to merchandise. A good way to earn points is to use your card on everyday purchases and pay off the balance at the end of the billing period. It is essential that the balance is paid off, or interest will start to occur—offsetting any sort of reward one can earn.
Redemption Opportunities
It’s always a good idea is to check out the ease of use when dealing with redemption options. Automatic deposits to a bank account for cash rewards is an example of a simple way to claim a reward. Some card companies are also starting to allow the account holder to donate rewards to charity or add to an education account. If the redemption process is too complicated, you may be better off finding a more suitable card.
Features and Benefits
Features and benefits can be extremely attractive when choosing a card and it’s important to discover what features most benefit you. When finding a new card, you can look for cards that give you more than credit. Some student credit cards offer exclusive memberships to savings clubs. Travel assistance, warranty protection, and auto insurance discounts are all special features that are associated with some cards.
Fees and Charges
Fees can be sneaky. Some cards charge a fee upon opening the account, reducing your initial credit line. Others charge an annual fee that is charged to your account every year, regardless of how much or little your use it. Annual fees can run anywhere from $35 to $100 a year, but if you are not careful, the fee can overdraft your account—causing additional penalties and fees. It is unlikely that you will find a student credit card that is without fees.
Know Your Options!
It is important to know your options when picking a student credit card as many factors go into what makes a credit card the right card for you. Take the time to compare the criteria set above, as it your best option for maintaining a responsible relationship with lenders. Responsible use will increase your credit score and facilitate opportunities down the line for better housing, cars, and even careers.
