Student Credit Cards offer one of the first steps into financial independence for young college bound students. The lessons of fiscal responsibility are often taught at a young age, but it is important to follow those practices as the years go on. Finding the right card can be difficult with so many options and incentives, here are some tips to keep in mind.
What are Student Credit Cards?
Truthfully, the difference between a student card and a regular credit card is almost nothing. Student cards will have a higher interest rate because a line of credit is being given to a young customer with little to no credit history. Often the rewards structure on student credit cards is different to better accommodate the usage of a young adult at college.
Points and rewards
Each company will have it’s own points/rewards system. As a student, some of the incentives to look for are card companies that offer reward points for using your credit card at book stores, movie theaters, good GPA rewards and on-time payments. If you plan on driving home often, or to and from campus, cards that offer gas rewards is another good idea.
Fees and charges
The late payment, it may happen, and it’s important to be prepared if it does. When looking for a card, keep in mind the fee they charge for late payments and the grace period the card may have. It’s important to make at the very least the minimum payment required each month and is suggested that you try and pay more if you can. If you are going to be late, choosing a card with the lowest late fee will be helpful so that you do not end up being buried in fees. The grace period before a credit card company charges you a late fee is also something to watch. The average is about 20 days, but can be as low as 10 days and as high as 25 days.
Because student cards often have lower credit limits it is easier to max out the card. Keeping your credit card maxed out can damage your credit rating as credit-to-debt ratio plays a significant factor in yourcredit score. It is important to not overspend with your card, this can become a bad habit that can hurt you financially in the future.
Student Credit Cards can be a great way to start establishing credit. It is important to remember that this is the start of your credit history, be responsible with your finances. If you make mistakes involving your credit worthiness now, it can be a long road to recovering the trust of creditors. Credit cards can be a great financial tool if used properly and a detriment to your finances if abused.
Do you have a first time credit card story or tips to help others avoid costly spending mistakes? Share your thoughts.