A Guide to Choosing the Best Student Credit Card
Think long and hard about your alternatives before requesting a student credit card. Here are a few inquiries to make:Would a credit card be a good fit for you? If you fail to pay your bills on time or default on the amount you owe, it can take a long time to repair your credit.
Are you aware of the implications of your actions? Do additional reading to fill in any gaps in your grasp of credit and credit cards if you feel unprepared.
Do you prioritize ease of use over maximizing profits? To avoid the hassle of managing rotating categories, a flat-rate card is likely to be the preferable option. Even if they provide great introductory benefits, some credit cards aren't the greatest choice for real category bonuses. Is it an introductory rewards program or an ongoing rewards program with significant payouts that you're after?
Choose the best credit card for you by giving serious thought to your spending habits.
Expenses Paid Each Year
A yearly fee is associated with many credit cards. Better rewards, greater bonuses, and other significant perks are typically offered with these cards. Before you choose a credit card—one with or without an annual fee—there are a few things to think about. Whether the extra benefits will be sufficient to justify the yearly charge should be your first priority. Your first thought might be, "Will the benefits or rewards of this card pay for the fee?" However, you need to consider whether the card's perks and rewards will outweigh the annual charge and provide greater value compared to a card without one.
Another thing to think about is that yearly fees are usually deducted from your available credit right away, which can be a problem if you're a student with no credit history. With a $300 credit limit and an annual charge of $95 on your card, your available credit is only $205. When added to your regular expenses, an annual charge can create a hefty sum.
It's wise to have a low credit usage ratio, which measures your debt to available credit. According to experts, you should not go above 30%. So, ideally, you'd want to keep your balance below $100. This might not be feasible all the time if your credit limit is low. If you pay off your amount in full every month, your credit score will rise.
Payment Terms and Interest Rates
Think about the interest you'll pay on a balance transfer or the card's annual percentage rate (APR). The terms and conditions agreement for your credit card spells out all of the fees you may expect to pay, dispelling any rumors to the contrary. Before you apply, make sure you read the small print. Once you get your card, read the agreement again. You should hold on to this paper until when you need it.
You should be aware of the following common credit card fees:
Recurring cost
Cost of transferring funds
Charge for cash advance
Fee for overseas financial transactions
Fee for payment that is more than due
Fee for refunded payments
You should exercise caution and read with further care because of these less typical fees:
Fee for account upkeep
Extra cost for the card
Cost of application
Evaluation of Credit
A lot of students should think about getting student credit cards because they allow you to create good credit. But if your card company doesn't notify the three main credit bureaus about your account, this won't occur. To get the most out of your credit report, look for a card issuer that shares information with all three of the main consumer reporting agencies. Better credit, earned via responsible use of a student credit card, can open doors to lower-interest loans and more attractive credit card offers.
Rewards
A lot of student credit cards have good rewards programs that give you cash back or points. The incentives on student cards may not be up to par with those on the finest rewards cards, but they're usually greater than what you'd get with a secured card or another method of repairing your credit.
Money Deposits
There is no need to put down any collateral for the student credit cards mentioned before because they are unsecured. There is also the option of secured credit cards. A security deposit is typically required for these, and its amount is used to establish the possible credit limit. If the thought of spending too much money worries you, they can be a good alternative to consider.
Students might benefit greatly from unsecured student cards that do not require a security deposit. An unsecured credit card will enable you retain more of your hard-earned cash on hand, while a secured card will hold onto your deposit until you either shut the account or move to a more flexible card.
Transaction Fees for International Transactions and Worldwide Recognition
Going on a trip overseas? Before you go shopping abroad, double-check that your credit card is accepted everywhere and won't charge you extra. International acceptance is influenced by card networks. While Discover isn't accepted in all overseas countries, Visa and Mastercard are accepted by most international merchants.
While most credit cards charge a cost of 1% to 3% for international purchases, certain travel-focused cards do not charge any fees at all. These fees may apply if you shop at international retailers, regardless of whether you leave the U.S. In any case, these charges can add up fast and significantly increase the cost of travel. Currency conversion fees are different from foreign transaction fees.
Another thing to think about could be the travel benefits. On top of being accepted at most worldwide merchants that use credit cards, the Bank of America® Travel Rewards credit card for Students offers a number of perks tailored to students going abroad and doesn't incur any foreign transaction fees.