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College students can start building their credit history with the proper use of student credit cards. If a good credit history is achieved by the time of graduation, students can benefit from lower loan and mortgage rates later in life. In addition, students can use their credit cards for everyday purchases while taking advantages of cardholders’ rewards and benefits.
But before you choose a student credit card, there are several things for you to consider, like APRs (annual percentage rates), rewards and applicable fees or charges.
Annual Percentage Rate (APR)
Some providers of student credit cards don’t charge APR for the first 12 months of usage, which means you’re getting an introductory rate. For these types of cards, pay extra attention to the APR that applies after the introductory rate expires, which varies greatly per credit card provider. Most APRs for student credit cards range from 11 percent to 22 percent, but you can get higher or lower rates, depending on the personal financial profile. Getting the right APR is the most important thing to consider when choosing a student credit card.
Student credit cards have great benefits, like redeemable prizes or cash rewards, and they can be very useful if card balances are managed properly. If you are able to pay your credit card balance on a regular basis, it’s better to use your card, rather than cash, for purchases so that you can take full advantage of reward programs. Plus, because you’re paying off your entire credit card balance on a regular basis, no interest charges would be incurred. You should always check reward programs’ details to take full advantage of available bonuses. Depending on the credit card, you might even get cash back bonuses of 1 percent or more. For example, Discover cards offer a 5 percent cash back bonus on gas, movies and theme parks purchases, but only during specific times of the year, like summer.
Cash-back bonuses are usually credited to your card’s account or directly into a pre-selected bank account. You may even choose to donate your cash-back rewards to a charity of your choice. There are basically many ways to redeem your rewards based on the credit card provider.
Once you have checked a student credit card’s rates and reward programs, consider other features like car rental insurance, extended warranty protection, fraud liability protection, and travel assistance, to name a few.
Extra Fees or Charges
Most student credit cards have extra fees and charges for late payments or over the balance limit transactions. Some of these fees and charges may even increase your APR for failure to manage your financial obligations properly. You should also consider extra charges for international transactions, if you like to travel or purchase items from abroad. Avoid any surprises from credit card statements by checking all fees that may apply based on how you use your cards.
Student credit cards vary in regards to offers, interest rates, and fees. With so many credit card options available on the market, it’s important to check all contract terms to choose affordable rates and appropriate rewards. After finding the right card for you, avoid financial hardship simply by following credit cards’ payment terms and conditions.
Sam Burgoon is a financial contributor for the Manilla Blog and Manilla.com, a free service that lets consumers manage their bills and accounts in one place online. Sam also works for Credit Season, a free personal credit-matching service.