Remember Sergeant Friday in the 50s program, Dragnet? His favorite phrase was “Just the facts, Mam; just the facts.” The facts are what you absolutely need when you, as a student, apply for a college credit card. Here they are:
Benefits of a College Credit Card
• Student credit cards allow you to get cash when you need it
• Student credit cards allow you to charge something when you do not have the money to pay for it.
• Student credit cards let you earn cash back or rewards with expenditures.
• Student credit cards help you build a credit history that will stand you in good stead when you want to get a loan to buy a home or a car later in life.
How do I know which college credit card I need/want?
1. Cash back rewards vary from 1%-5% on student credit cards. You will need to read the entire application form prior to choosing your card to understand just what the card company will offer you, how long the offer lasts before it expires, and what the terms are. See if this college credit card is one that offers you points for keeping a good, steady GPA (some do) and for making your payments on time.
2. Read carefully so that you understand just how you can redeem your points. Find the college credit card that lets you redeem them for the things you value most (for instance, if you are far from home you may want to redeem them for plane tickets, train tickets, etc.)
3. Does the college credit card have the 0% introductory APR for at least 6 months from the activation of the card? If so, to what does the rate apply? Read about balance transfers, cash advances, credit card checks and charges to learn if you have the same balance on all. Cash advances and balance transfers are usually larger amounts so you will want the 0% rate on those items.
4. Use your student credit card wisely. Do not use it to make additional student loans when you need money. You want to pay off your student credit card quickly and make your payments on time every month. You will not want to add large amounts that might make you fall behind. Neither will you want to owe a large amount of money to be repaid when the introductory 0% rate jumps to 12%15% or above at the end of introductory time offer.
Student credit cards are wonderful. It gives one a feeling of safety to have a college credit card in one’s pocket or purse. College Student credit cards are a great way for a young person to learn, first hand, about finances and budgeting. It builds a credit history that is separate from parents and can be used by lenders later in life as a measuring stick for you as a trustworthy creditor. You should really choose a credit card that was created especially for students. Do your research and follow the steps outlined below to be certain to get the best student credit card for you and your situation.
1. Research – do not choose your college credit card until you have performed your due diligence. Do not settle for the first college card that is offered to you. Read about all of them. Make a chart comparing them. Parents teach their children about credit; what lessons have you learned from your parents? Check their rates and how long those rates last. Learn what the extra fees are for using the card for a “cash advance”, a “credit card check” or for making a balance transfer.
2. Carefully consider how you intend to use your college credit card. Do you intend to use it often and at least until you graduate? If so, will this card do what you need done? Will this card be one that is automatically cancelled once you are no longer a student or will it morph into a regular card and continue your credit history and your relationship with the company? Your credit score is based on longevity. You want to keep your card as long as you can so that you will have a more stable credit history.
3. What are the fees for this student credit card? Yes, credit cards have “fees” for a number of things. There is a “check fee” for using a credit card check (usually 10% of the amount of the check you have written). There is a “transaction fee” for getting a cash advance, and there may be other fees you should know about. Don’t forget the “late fee” for making your payment after the due date.
4. What is the APR (annual percentage rate) that you are being charged? Will you be charged the monthly interest if you pay your college credit card balance in full each month? What about on balance transfers?
5. Is there an annual fee that you must pay for the privilege of having your student credit card?
6. Is there a late fee? What is the late fee? Will late payments cause your interest rate to jump to a higher percentage?
7. What happens if you go over the limit set for you when you get your student college credit card?
8. Are there any special perks to having this particular college credit card?
Sponsorship or Free Agent?
Finally, it can be a little difficult to obtain even a college credit card on your own. Some card companies require that the student have a co-signer (usually the parent(s) or some other responsible adult). Students under the age of 21 have to meet additional requirements not required of those of legal age (rule of The Credit Card Act). An under 21 student has the choice of either get someone to co-sign or show proof of income great enough to justify the issuance of the card. If you have a job with reliable income, you will most likely be able to qualify for the student credit card on your own. If you do not have a job, you will need someone to co-sign for you. Asking someone to co-sign is asking him/her to take a big step. Understand that whatever you do with this college credit card will affect your co-signer. If you do not pay your bills on time, this will be reflected on the credit of your co-signer. If you should default on the payments and amount on the college credit card, the co-signer will have to make the payment for you. This is a lot to ask someone to be willing to do for you. A prepaid student card is an option if a college credit card co-signer is not an option.
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