Comparing Student Credit Cards|What Studets Ought To Know
It’s Finally Come
As a student, there have been many enjoyable parts of your life I’m sure. However, another thing that I’m sure of is that there is no moment that is more enjoyable than the day a student graduates high school and goes off to college! Chances are that for the last 18 years, you have been learning, growing and waiting for the day that you can be on your own making your own rules and decisions! Well, congratulations, today is your day, it is finally here, you have graduated from high school and now, it’s time to go onto college!
One thing often overlooked by high school graduates when thinking about the impending adventure that is soon to come is the fact that not only do they now make their own rules but, it is now time that they need to take care of their own finances. For many young adults in the United States, the day the graduate high school marks the day they start paying their own way. It’s time to get a job!
One of the tools that you will need to be a financially independent college student is a student credit card. Credit cards are an important piece of the financial puzzle to nearly 87% of United States consumers over the age of 18! They provide the security of having a few extra hundred to a few extra thousand dollars there for emergencies. Many consumers use their credit cards on a day to day basis for regular purchases like groceries, gas, ect… with the intentions of paying the balances off at the end of each month. The one thing that remains the same is that lots and lots of consumers use credit cards as a financial tool! Chances are that if you are reading this article, you are looking for your first student credit card. Well, here are a few tips that will help you compare the credit card offers available to you to help you find the best one!
How To Compare Student Credit Cards
Step 1: Make Sure That You Compare Interest Rates: The first thing that anyone should look at when it comes to comparing credit cards is the interest rate that he or she will be charged. Interest rates are conveyed as a percentage of the balance. This percentage is the fee that consumers will need to pay for the privileged of borrowing money using their credit card. The lower the interest rate on the credit card, the lower the fees associated with borrowing using it. Adversely, the higher the interest rate on the credit card, the higher the fees that consumers will need to pay to borrow using the card. Also, it is important to remember that credit cards do not have only one interest rate, they have multiple different interest rates that will be allocated to different parts of the balance. Here are the different types of interest rates that you will need to compare:
- Standard Interest Rates: Standard interest rates, also known as purchase interest rates, are the rates of interest that will be charged to the portion of the balance that is accumulated through “standard purchases”. This includes any general purchase such as gas, groceries, pizza, movies, ect… Generally, this interest rate will be charged to the majority of your credit card balance simply because, most of your credit card balance will most likely be accumulated through standard purchases.
- Cash Advance Interest Rates: Cash advance interest rates are generally one of the higher interest rates on the credit card. This interest rate will apply to any portion of the balance that is accrued through cash transactions. Cash transactions include any transaction in which cash is transferred such as A.T.M. withdraws, cash back at the local grocery store, wire money transfers, ect…. Generally, because this will be one of the higher interest rates on a credit card account, I would advise not using credit cards for cash transactions.
- Introductory Interest Rates: Introductory interest rates, also known as promotional interest rates, are incredibly low, short term interest rates that are designed to draw the attention of consumers comparing credit cards. Introductory interest rates will usually apply to all balances and last anywhere from 6 to 12 months. Although, these rates are interesting to say the least, it is not wise to make them the basis of your decision to apply for a particular credit card. These low promotional interest rates are often called TRAPS in the industry because they end in short order leading to higher long term rates. This is why it is important to compare all interest rates associated with the credit card you are interested in!
- Default Interest Rates: Default interest rates, also known as penalty interest rates, are the highest interest rate that you will find on a credit card account, and for good reason. Default interest rates apply to the entire balance on a credit card should the consumer default on his or her account. Examples of defaults would be making payments late, spending more than the credit limit allows, bounce check payments, ect… It is best to keep your credit card in good standing to avoid default interest rates.
Step 2: Time To Compare Fees: I’m sure you didn’t think that the interest rates would be the only fee on a credit card account did you? As a matter of fact, credit cards have multiple other fees that it is important you are aware of and agree to. Below is a list of fees that you want to make sure you know about:
- Annual Fees: The first and generally, most noticeable fee on a credit card aside from the interest rate will be the annual fee. Annual fees are just that. They are fees that are applied to the balance once per year for the ability to use the credit card. In most cases, annual fees will range anywhere from $25 to $150. However, in some cases, you will find that annual fees can get much higher. In other cases, you will find that some credit cards have no annual fee.
- Foreign Transaction Fees: These are the fees that will be charged should you make a foreign transaction on a vacation or online. Generally, the foreign transaction fee is represented as a percentage of the total transaction amount.
- Balance Transfer Fees: Balance transfer fees are the fees that the lenders charge for the process of completing a balance transfer or, transferring a balance from one credit card to another. Generally balance transfer fees will also be represented as a percentage of the total transaction.
- Cash Advance Fees: Cash advance fees are just that, they are fees that are charged when any cash transaction is processed. Generally, these fees will bee the greater of $5 or a percentage of the total transaction.
- Penalty Fees: Penalty fees are only charged to a balance if something has been done wrong. These fees would be associated with late payments, bounce check payments, over limit spending, ect…
Step 3: And The Fun Begins: Now that we have droned through the task of comparing the best student credit cards for fees and rates, it’s time to get into the fun stuff. That’s right, I said fun! Due to overwhelming competition in the credit card industry, many lenders have decided to offer rewards with their credit cards. These days, we have great rewards categories like sky miles credit card offers, cash back credit card offers, gift card rewards, ect… Once you have compiled a list of the credit cards that would be of interest to you as it is regarding their fees, it is time to look at these cards to see which ones have rewards that you would enjoy. When you have found the one, simply fill out the application and you are on your way to your first student credit card!
List Of The Best Student Credit Cards