Getting the Most from Student Credit Cards
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by: barrywaters
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Word Count: 498
Now that you are a college student, credit card companies are going to court you with a passion you only wish you could see from prospective boyfriends or girlfriends. To a credit card company, you are their dream date: young, with a clean credit report and (they hope) no understanding at all of how credit cards work. They want you to take a credit card with an irresistibly low introductory rate, spend madly, and owe them thousands upon thousands of dollars when your interest rate shoots up at the end of the introductory period. Lets make sure that doesnt happen.
The first tip is to ignore the huge, sparkly "0 percent interest" printed in bright red and gold letters on the front of the brochure. That is the introductory rate. After a set period, probably six months, it vanishes, and suddenly you owe the real interest rate. The interest rate on a student credit card is typically a little higher than the rate for an older persons credit card, and is currently around 13 to 20 percent. Student default rates zoom up to 25 to 31 percent if your payment is even a day overdue. The new, higher interest rate applies retroactively to all your purchases, so even if you charged an item when your interest rate was zero, at the end of the introductory period you must pay 13 percent (or 19 percent, or 30 percent) until your entire balance is paid off. If you let your interest compound, you can wind up paying two or three times as much as the original sticker price.
The key to disappointing a credit card company and keeping your wallet fat is to get the card with the lowest regular interest rate, then watch your spending as though you were already paying the full regular rate on your purchases. To find a credit cards real interest rate, look for the fine print or for a chart that illustrates the rates. Find the standard purchase annual percentage rate (APR) and the standard cash advance APR. These are the rates you will really pay. Compare all of your student credit card offers, ignoring the introductory rates and all the frills and cash back offers; the only important considerations are the standard purchase APR and the standard cash advance APR.
Once you have narrowed the selection down to a few cards with the lowest regular interest rates, search the fine print for gotchas like high default interest rates and annual fees, and eliminate any cards that have them. Now that you have a few likely offers with low interest rates and no nasty surprises, you are free to consider rewards packages and pick the student credit card you like best. Enjoy your new credit card and set the foundation for your future credit... on your terms. Related topics Credit card application - Best credit cards - Secured credit cards -
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