Getting a credit card is an important decision for many of America’s students. Today there are many options out there, and many companies are targeting college students to get them to sign up with their card. Getting a card is an important step, but even more important is getting the right one. Here are some mistakes to avoid when choosing a credit card for a student.
Getting the First One Offered
Getting a credit card without comparing it to the others out there is a bad idea. While there may be someone at the student union offering applications, knowing what special programs are available on other cards as well as what the fees and different interest rates are should influence a student’s selection. A student may also want to see what is available at their own banking institution, as the ease of the transactions may be higher with a company they already use.
Getting One with a High Interest Rate
While the card may boast 0% interest for now, that may not last. Getting a low start up interest rate, and then having the interest rate increase later can be a financial surprise that a student may not be ready for.
Getting Too Many
Having too many revolving credit accounts (which credit cards are considered) compared to installment credit accounts can negatively impact a person’s credit score. While having many cards to transfer balances between can sound like a good idea, it can be more trouble than it is worth.
Getting One with a Low Limit
While a card company will often start a person on a lower limit and then increase the limit as they prove their financial responsibility, getting a decent starting credit limit is important. While a student may be using the card regularly, they will want to have available credit for emergencies and holds from hotels and rental car agencies.
Getting One with Additional Charges
Some credit cards will suck a student in with their gift and low initial interest rate; they may charge high annual fees that can be added at inconvenient times each year. They may also have high late charges or over limit fees. A student should be able to find a company that can offer them a card without a yearly fee, and even additional incentives such as rewards programs.
While signing up for a credit card with an application may only take a few minutes, a student should take his or her time to research what the best choice is for them. It’s vital to ask questions to find out if there are high fees or interest rates farther down the road, or to see what special programs they can offer for a student. If a student makes sure they avoid the above mistakes when getting a credit card, they will be sure to get a card that will work well for them and help them build their credit responsibly.