Student Credit Cards: Tips for Avoiding Bad Offers
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by: barrywaters
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Student credit cards work exactly like regular credit cards, and because theyre designed for students, theyre easier to apply for with no credit history. However, the price for getting a credit card without a secure credit history is higher fees and higher interest rates, both of them designed to offset the potential cost of offering credit to an unproven consumer. Sometimes, credit card companies even bank on customers inexperience to hit them with additional fees that more experienced creditors would know to refuse or ask to be waived. Heres how to tell which student credit cards are good, and which you should pass on.
* Check the interest rate. If the APR (Annual Percentage Rate, meaning the standard interest rate) is at or within a couple of points of the APR of a regular credit card, the offer is good. Dont bother applying for student credit cards with higher rates. Also stay away from credit cards with a default rate that is noticeably higher than a regular credit cards default rate. This is the rate youll pay if you make a mistake in paying your bill, and it can be entirely too easy to make such mistakes, so get a default rate thats as low as possible.
* Is there an annual fee? There shouldnt be. Annual fees are a relic of the days when credit cards were rare and only the wealthy had them. Nowadays, no good credit card charges an annual fee. If you find an offer thats otherwise excellent but it has an annual fee, call the company and see whether theyll waive the fee. Most credit card companies will. They assume that the only people who will let the fee stay on their contract are the inexperienced credit users, and the more savvy customers will ask them to waive the fee as part of the application process.
* There should be no monthly or weekly fee at all. Period. These fees are a sign that the card was designed to gouge people whose credit rating is so poor that they cant get a card anywhere else. They should not appear on any legitimate student credit card agreement. If you see them, dont waste time asking the company to waive the fees. Throw the application away.
*Make sure it wont cost you to pay your bill by phone. Many credit card companies allow you to pay by phone either routinely, or as an emergency measure when youre about to miss a deadline. Paying a small fee for emergency payments is acceptable, if not optimal. Making a routine payment by phone shouldnt cost anything.
* Check online to see what other consumers say about the company. Do they have a history of jacking up interest rates without warning? How is their customer service? If you find significant problems, avoid the company.
Student credit cards are an excellent way to build your credit history, but be careful which cards you choose. The right cards will help you to build a sound financial future. The wrong cards will leave you with sky high interest rates and hundreds of dollars in fees. Do your research before you pick student credit cards, and youll know which offers are the best.
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