Student Credit Cards: Off to School and Into Debt
A Credit Card is More than a Convenience
Credit cards can be a blessing and a convenience but they can also get you into financial trouble if you aren't careful.
Always Compare Credit Cards and their fees, interest rates, annual membership fees, and penalties, before making your final choice. How to find the right credit card for you. What to look for. Should your business have a separate credit card? Does your student need a credit card?
You can get credit cards with bad credit or no credit, but they aren't cheap. The application procedure is more involved than for those who have good credit. Most likely you will have to show proof of income through steady employment. This is understandable since you've already shown you're a bad risk for credit.
Some companies offering credit cards to those with poor credit will only do so on a secured basis. You deposit a specific amount, say $1000.00, into an account with the company and they grant you a credit card with a $1000.00 credit limit. In some ways this is more like a prepaid debit card than a credit card, but at least you'll have the ability to shop online and charge purchases.
The option of an unsecured credit card is available but at very low limits, usually less than $1000.00. As you use the card and make prompt payments your credit limit will gradually be increased.
NO matter what credit card, loan, or mortgage you qualify for, protecting your credit is important. And that means protecting your identity.
So Many Choices So Many Credit Cards: How Do You Choose?
You need to ask yourself several questions to decide what kind of card is best for you.
What will you use the card for?
If it's for every day purchases and conveniences then a card that has rewards might be more attractive to you. Some cards offer a yearly summarization of purchases by category which can help you budget as well. Article continues below.
Will you pay off the card every month?
If so, a high interest rate isn't as important since there won't be a balance. Try to get a card that doesn't charge an annual fee. You also want a card that doesn't charge interest from the date of purchase, or one that has a grace period of up to 30 days before interest charges begin. If you carry a balance every month or plan on transferring another card's balance to your new card, then low interest rates are important.
Will you be using the cash advance feature a lot?
Then obviously you want a card that doesn't have restrictions on how much or how often you can get cash. You also want a card that doesn't have additional fees associated with cash advances, or a per transaction fee. Some credit cards also charge a higher interest rate on the cash advances to compensate for missing the merchant fees from purchases. Many cards apply payments to those charges that have the least amount of interest being generated first and don't apply the payments to the cash advance portion until everything else is paid.
Do you travel?
If your schedule includes a lot of travel you might want to consider a card that has a cash back feature. Hotels, restaurant meals and airline tickets can add up fast. Of course keep in mind the interest rate as well, unless you pay off the balance every month. Some airlines offer their own branded credit card under the Visa or Mastercard logo and then offer bonus mileage whenever you use their card.
When you apply for a credit card no matter which one, you need to look carefully at and understand the terms for the credit card. Make sure you know what the interest rate is, the annual fees, transaction fees, and any balance transfer fee. It's also important to know when the interest charges start, how a late fee is calculated and the penalties if any of late payment.