As shoppers gear up, ready to spend more in preparation for Christmas and New Year, many credit card companies offer special deals such as rewards or 0% introductory APR. Even students are more likely to increase their credit card spending during the holiday season.
If you’re a student, should you get a 0% APR card? How can you make the most of a credit card that offers 0% introductory rate? How can you use it to your advantage and avoid the risk of bad debt? In this article, let’s answer these questions one at a time:
Should You Apply for a 0% APR Student Credit Card?
Students are advised to be very careful when acquiring credit cards. Remember, managing multiple accounts will prove to be a bigger challenge. Having too many credit cards will only encourage spending and if you run up balances on each card, repayment can be a burden. Not being able to pay off your credit card balances in full can lead to debt build-up and bad credit. Ideally, one or two credit cards for students should be sufficient to build good credit so if you already a card with a reasonable rate, acquiring a new credit card may not be necessary.
However, if you feel that a credit card with 0% rate will enable you to save on your holiday expenses this year, then you may consider acquiring one. You can take advantage of the zero introductory-period to pay off your charges one step at a time without incurring interest rate charges. However, always remember that the zero rate will not last forever. Most issuers offer 0% APR for only six months so you need to make sure that you can complete your payments before the introductory period ends.
Making the Most Of Your 0% APR Student Credit Card
Choose the right card. First, evaluate the card to make sure that the regular APR will still be reasonable after the introductory period. Don’t forget to check out the other fees associated with the card. Read the fine print to make sure that the conditions are fair and reasonable.
Pay off as much as you can. Don’t be content with submitting just the minimum required due. Instead, you should try to pay off as much as you can from your balance. See to it that you will be able to complete your payments at least a month before the regular rate applies.
Check which APR applies to what. Some credit cards carry more than one APR. The zero interest rate may only be applicable on balance transfers, but not on new purchases and cash advances. You might discover that the rate applicable on new purchases and cash advances are actually much higher than you expected.
Watch your credit limit. Although your student credit card offers zero interest rate, you should still keep your charges minimal. Don’t forget that if you max out or exceed your limit, you could be penalized with high fees. Not only that! Your personal credit score can suffer as well. Before using a 0% rate student credit card, check your balance and keep your credit usage below 30% of your available limit.
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