If you are a student, the easiest way for you to build credit history is to apply for your first credit card. Under the new credit card law, it is requirement to have a co-signer so be sure to ask your parent or guardian for help. On the other hand, if you are earning your own income, you can apply for a credit card even without a co-signer.
In this post, let’s discuss pointers that you should consider before signing up for your first credit card.
Factors to Consider before signing up for a credit card for students
Go with a low rate card. Interest rates on credit cards for students range from 15% to 35%. It’s best to find a low APR card for times when you need to carry over a balance. Watch out for cards with incredibly low variable rate as these are subject to change depending on the Prime Rate.
Is there an annual fee? Annual fees can cost you anywhere from $30 to $50 or more each year, depending on the card. Your best choice is a student credit card with a reasonable APR and no annual fee.
Start with a low limit. It is a good idea to start with a low credit line to help you exercise control over your spending. Since you do not have permanent employment yet, you can greatly reduce the risk of bad credit by watching your credit card usage.
Credit reporting. Make sure that your chosen college credit card comes with credit reporting. Take note that some Issuers may not report payments to the three major credit bureaus. This is a crucial provision that you should look for when applying for a credit card.
Fraud liability protection. Choose a credit card that comes with a $0 fraud liability guarantee. This guarantee will protect you in case of unauthorized charges in your account. With this in mind, carefully your monthly billing statements before submitting payment to make sure that you’re not paying charges that are not yours.
What about rewards? A student reward credit card can be a great option if the type of reward matches with your lifestyle. However, student credit cards with rewards usually require good credit so you need to have established credit history in order to get one.
Furthermore, you may find that the interest rate and the fees are higher than a non-rewards credit card. If you decide to apply for a rewards student credit card, do your best to avoid the interest rate and late penalty costs by submitting full payment on time at all times.
Read the fine print. Before submitting your application, carefully read the fine print to make sure that there are no hidden fees or unfair terms associated with your student credit card.
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