Credit cards are a great way to build credit as long as you know how they work. So, the question is, what should students look out for when it comes to credit cards?
As a student, with little or no credit, it can be hard to get a credit card in the first place. If you are able to get one, it is easy to be fooled by credit card companies with offers of low interest rates and rewards programs.
When applying for a credit card don’t be afraid to ask questions. The bank or card company is there to serve you, so get your money’s worth.
Interest
We’ve all seen credit card offers of zero percent interest. But most companies put fine-print limits and rules on their generous no-interest offers. Companies will limit the length of a promotion such as 0 percent interest for six months or only continue the no interest deal while payments are made on time.
Be sure to ask what the regular interest rate is and whether or not late payments will raise the interest rate. Every credit card is going to have an interest rate, but some will have lower rates than others so it’s important to shop around.
Rewards
When it comes to rewards in the credit card world, not all rewards cards are equal. Some rewards cards are worth paying a higher interest rate, whereas others promise good deals but end up giving students the slip, leaving them with bad credit and no rewards.
Some rewards cards, for example, offer buyers flying miles for purchases with the card. What the company doesn’t advertise is that there is a cap on the number of miles you can receive. When the limit is reached, the card is still good for making purchases, but you will no longer receive miles for purchases made with the card.
When that credit card offer comes in the mail, take the time to read both the offer letter and the fine-print on the back. Look for information on how long the zero percent interest rate will be in effect and whether or not late payments will change the interest rate.
Student credit cards can be great for people who don’t have any credit and just need a starting point. Rewards cards such as gas cards and flying miles cards can be great for people who travel a lot. Here are just a few popular credit cards that CreditCards.com featured in its student credit cards and rewards card sections.
Contact the reporter at beth.easterbrook@asu.edu
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Great piece. It is also very important that you keep your debt below 50% of your credit limit. Many students who get their first credit card will have tendency to max out their cards. It would be ideal if you dont do that but if you do you want to make sure you keep your debt under 50%. Your credit score will take a much bigger hit if your revolving debt is higher than 50% of your credit limit. Your credit score will follow you for the rest of your life so you should do everything you can to protect it.