The Differences with a Student Credit Card
College students have access to something that no one else does and that is student credit cards. Unlike traditional credit cards, which are typically only available to those with jobs and full-time incomes, student credit cards are marketed towards those currently enrolled in school. The providers offer more lenient requirements because the students have less income than working people.
Often, the companies market the cards at college campuses. They set up stands at financial fairs, run booths at campus hotspots and go door-to-door in dorms, sororities and fraternities. Companies typically offer some type of incentive for applying for a card, such as a tee shirt, hat, or stuffed animal.
Student cards are different from traditional cards because the cards often lack application fees. You fill out a short form, listing your name, address, school and any income and submit it back to the company. Most companies respond within a few weeks or less. The cards also reduce the minimum amount due every month, as most students do not have full-time or even part-time jobs.
As a student, you do not have access to the same benefits as you would with other credit cards. For example, the card might have a lower credit line than you would get if you worked full-time. The cards typically have a high interest rate, especially when compared to other types of credit cards.
To wrangle new customers, the issuers might offer a card branded with the school`s logo or mascot, or offer a card with a low introductory rate until graduation. The company hopes that by grabbing younger customers, the customers will stay until they make a full-time income. The money you spend on the card during college carries with you, earning the company even more money.
Opening up a line of credit during your college years has the potential to ruin your future self. As a student, you have little to no experience with credit. You might not realize that the low introductory rate changes faster than you thought and sometimes only lasts a few months. Once the rate increases, your minimum payments go up and you may not afford to pay off the debt.
Unscrupulous companies hook college students by offering low rates and large lines of credit. By the time your first payment comes, your minimum payment skyrockets past what you can afford. Some companies have even faced fines and penalties from the government for their actions. For example, the companies offered multiple credit cards to a single student, then called and harassed the student into paying back the money.
Be smart when it comes to getting your first credit card. Avoid any fun incentives the provider offers and read the paperwork carefully. Use a credit card comparison tool, which lets you compare the interest rates and other factors with multiple student card providers. Look for a card that comes with a low interest rate, lenient repayment terms and those without additional or hidden fees. Something as simple as a card that offers one or two free late payments a year is a benefit to you. The right card helps protect your future.
Credit Card Fees
Credit cards are a convenient and easy way to pay for goods and services. You don`t necessarily need to have the money required for the item right away when you put the cost on credit. Once you have a credit card balance you can choose to pay off the exact amount that you owe or you can take your time, making payments each month.
Regardless of how you choose to pay back the amount you owe to the credit card company, fees can be incurred. There are a number of reasons why you may have a fee. Be sure to check your statement regularly as the costs of owning the credit card are clearly labeled in your bill summary.
Some credit cards come with an annual fee. This is the amount that you pay yearly in order to use the credit card and the line of credit that comes with it. Different types of cards may have different fees. It is important to see if your credit card requires a fee yearly. Typically the amount is added to the credit card as payment. Some credit card companies will waive the annual fee if certain criteria are met.
If you keep a balance on your credit card the finance charge is probably the amount that is going to stand out the most. It is a percentage of the balance that you maintain on the card. In most cases, if you pay off the amount you owe right away you will not have to pay finance charges. Think of this amount as what it costs you to keep a line of credit with this company.
Some credit card companies will offer introductory rates that include zero finance charges for a set amount of time. This may include your purchases or balance transfers. If this is the case, you may want to avoid your current finance charges and move your debt to a card with lower or no finance charges.
The dreaded late fee is the second most common cost associated with a credit card. If you don`t pay your bill on the due date you are given, you incur a fee. This fee is added on top of the balance that you owe. Late fees are different with each credit card company, so be sure to ask about this before signing up. Even if you are just a day late, the fee will show up on your next billing statement.
When you open a credit card you are given a certain amount of credit. This is the amount that you can use to purchase the things that you want or need. When you start to get close to the limit, things can get a little tricky. Some credit card companies will deny the purchase if it exceeds your credit limit. Others will let you go ahead with the transaction, but you will have to pay a fee for being over your credit limit.
Credit cards are useful in so many different ways, but it is important to know that they do come with a cost. As you search to find the right credit card for you, consider using a loans calculator to provide you with more information. When you know how much you owe and what your interest rate is, you can learn more about how long it will take to pay the balance off and how things would change if you were to switch to another credit card.
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