Whether you decide to get a credit card or not, it’s your prerogative at the end of the day (well first you should read about the new Credit Card Act). But it’s important you speak with your family and anyone that helps with your finances. Also aside from the help for your family, you might have to have a family member sign for you.
When you decide that a credit card is a good fit for you, (whatever the reason might be) you should hold out until you find the credit card that is right for you.
What does the ideal college student credit card entail?
1. Search for free student credit cards.
Annual fees suck. There are credit cards where the annual fee is worth it but not for a student credit card with a $500 limit. Find a credit card with no annual fees. Remember that a credit card with no fees is highly negotiable. If the credit card company doesn’t want to offer it to you then simply just walk away. You’re guaranteed to find a credit card company willing to give you a credit card for free.
(Note: When you have a high credit limit and you spend a lot of money, a fee credit card can be beneficial when it comes to travel points. Not for college student credit cards. Especially not for your first credit card. The goal with you first student credit card should be to build your credit on a tight budget.)
2. Low APR.
Obviously your goal should be to pay off your monthly balance when your credit card bill comes in. In reality, shit happens. If you do have to pay interest you’re going to want to pay as little of it as possible. Most student credit cards start off with a 18% APR. You should do everything in your power to not accept this as your final rate. I mean common. Look at this scary credit card debt interest calculation to see how much you’ll have to pay.
If you want more details on how-to optimize your credit card and negotiate your APR, check out a chapter from Ramit’s book.
3. Get relevant rewards.
Cash back rewards credit cards are cool– if you spent lots of money on your credit card (don’t get any ideas!). The only problem is that you likely won’t get much cash back. After using my credit card for many major transactions last year, I received a little over $200 in cash back rewards. Of course, any time a credit card company gives me money is alright, but you have to use your credit card on major purchases to make it worth your time. Sometimes the risk of paying for major transactions (trips, tuition fees) is not worth the associated risk.
Airline/travel rewards credit cards work if you travel– LOTS. Going away for Spring Break once a year is not a good enough reason for a travel rewards credit card. You will have to pay an annual fee. The bright side is that if you travel lots, you’ll likely earn the money back in points.
After reading through this article I’m confident you’ll be able to find the perfect college student credit card for your specific situation. Just let me know if I missed anything…