If you are a student, you have probably become quite accustomed to receiving a deluge of credit card offers. Some of these offers can be confusing, but with a little bit of information and knowledge in what to look for in a student credit card, you may be able to find a card that suits you well. We will explain some of the important factors to consider when looking for a student credit card and offer a few examples of cards that may be interesting to students.
What to Look for in a Student Credit Card
No Annual Fee
If you are looking for a student credit card, look for one with no annual fee. Each credit card offer should clearly disclose its annual fee in the Terms & Conditions document made available when signing up for the card. Review that document carefully and make sure that there are no annual fees associated with the credit card. There are enough credit cards available that do not charge annual fees, so do not pay one for a credit card.
There are some instances where an annual fee might make sense. For example, if you were applying for a charge card (a card with a balance that must be paid off at the end of each billing cycle) rather than a credit card, then an annual fee might make sense as the charge card may offer you certain benefits and rewards, which offset the annual fee. However, if your intention is to maintain a balance on a credit card, then choose a card with no annual fee - this way you will pay less for the privilege of borrowing.
Low Introductory Interest Rate
Most student cards offer low introductory rates before their typical mid-teens interest rates kick in. Try to find a card that offers a 0% introductory interest rate on purchases for at least the first six months that you have the card. It's even better if you can find a card that offers 0% for longer than six months. This could save you quite a bit of money in interest charges if you pay your balance off before this introductory rate expires.
However, be careful, as the low introductory rate may entice you to rack up a large credit card balance that you can't pay off after the introductory term ends. Most student credit cards' interest rates range from 11% to 22%, so it's in your best interest to keep your balance as low as possible so as to minimize interest charges.
Rewards and Cash Back
If you are going to use a credit card, make sure you are getting something out of it! Many credit cards offer incentives if you use them. For example, some cards offer a 5% cash back reward on purchases made via certain websites while others will send you reward gift cards once you spend a certain amount of money. But be sure to pay your bill on-time every month, as missed payments often result in forfeited awards.
Which Cards Are the Best for Students?
Well, it really depends upon who you ask! Some people say, "Don't get a credit card, use a charge card that must be paid off each month!" while other people say, "Use a credit card responsibly." In any case, if you are evaluating student credit cards, here are some options that could be interesting to you (please take a look at the summary provided on The 2012 Best Student Credit Card Reviews and Comparisons site, but be sure to check each credit card's website as terms and conditions change regularly).
- Discover Student More Card
- Wells Fargo Cash Back Card
- Discover Open Road Card for Students
- Citi Visa Platinum Select Card for Students
- Citi Forward Card
The Bottom Line
If you plan to use a credit card as a financing tool while you are a student, find a card that charges no annual fee, a low introductory interest rate, as well as rewards and cash back. Be sure to use your card responsibly as most credit cards for students charge hefty interest rates! Most importantly, shop around, as the terms and conditions surrounding credit card offers change frequently.