Which student credit card is right for you?
For most students, credit cards aren’t high on their priority list of things to take care of—after all, students with loans can pay for things by direct debit from their bank accounts, as can students on aid financially from their parents.
The simple truth of the matter is that most students don’t think about credit cards, so when it gets to the point where they need one, they rush through the selection process, ending up with a card that isn’t optimal for their needs or even worse. -bad that actually turns out to be detrimental to them in the long run.
So what’s a student looking for a credit card to do? Simply, they have to research! See the wide variety of student credit cards, their advantages and disadvantages. Only choose one that you feel comfortable with and that you feel fits your needs well while not giving you too many setbacks.
So what features should you look for? Well, here are a few things to consider when looking for the perfect student credit card.
Taxis
Some cards charge you an annual fee to use them; I like to advise students to stay away from these types of cards, as usually their good points aren’t enough to outweigh the fact that you have to pay for them. You already have a good education, textbooks, place to live and many other things to worry about, there is no point in adding another one to the list.
Credit cards that charge annual fees are designed more for business people who spend a lot of money and have a lot of disposable income, rather than students on a tight budget. As a result, most cards will not have such a fee associated with them. However, if they do, consider whether you really need the benefits of that particular credit card before signing up for it.
Spending Limits
When I started my first year of undergrad, the first credit card I applied for had a credit limit of $500 and ended up being more than I needed at the time. As I went through university and my total expenses increased, I ended up applying to raise that limit to $1000 and add a second card with a $1500 limit – this was mostly just when I was buying textbooks or paying for tuition as I wanted to get the most out of it benefit from my credit card rewards plans, but this was a good example of me getting the most out of the cards.
Incentives
Incentives are bonuses that companies attach to their cards to get more people to sign up for them. A good example of this is a cashback card, where a small percentage of what you spend on your card is refunded to you.
A credit card that was popular with my friends was the grocery card that was issued by one of the chain grocery stores where we lived. Instead of straight cash back, they offered store credit that was twice the value of most cash back plans at the time, the practicality of which appealed to many students.
Interest rates
Ideally, this should never be a problem, as you could pay off your balance each month and thus never accrue interest on your account. In practice, however, things will not always be this way. Therefore, interest should also be an issue.
The industry average for annual interest rates is somewhere in the 19-23% range, compounded monthly. However, being a student, you should take advantage of the discounts available – if you do your research, you should be able to find a card that fits your needs with a student discount interest rate in the 10-15% range.
While 10% may not seem like a lot, if you ever lose your job, have to leave, or have another unexpected event that affects your finances, the interest can add up very quickly. One way to partially prevent this is to purposefully seek a lower interest rate first.
These are the four main aspects of a student credit card that you should research before making your choice about which one you need.
Ultimately, your decision should be driven by your needs at the moment and the card you feel best meets those needs. A good credit card, combined with careful spending and very strict budgeting, can actually help you as a student and provide you with benefits that you wouldn’t otherwise get from your purchases.
#student #credit #card