How to Avoid Bad Offers for Student Credit Cards
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by: barrywaters
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Student credit cards work just like credit cards for established consumers, and because theyre developed with students in mind, young people with no credit history are more likely to qualify for them. However, the price for getting a credit card without a secure credit history is higher fees and higher interest rates, both of them designed to offset the potential cost of offering credit to an unproven consumer. Sometimes, credit card companies even bank on customers inexperience to hit them with additional fees that more experienced creditors would know to refuse or ask to be waived. Heres how to tell which student credit cards are good, and which you should pass on.
* What is the interest rate? The offer is good if the annual percentage rate, or APR, is equal to or only a couple of points above the going rate for a regular credit card. Dont bother applying for student credit cards with higher rates. Also avoid credit cards whose default rate is substantially higher than the default rate for a regular credit card. The default rate is what your interest rate will be set to if you make any of several mistakes, including paying a bill late. It can be ridiculously easy to make these mistakes, so choose a card with a default rate as low as possible.
* Is there an annual fee? There shouldnt be. Yearly fees are a leftover from the era when only the rich had credit cards. Nowadays, no good credit card charges an annual fee. If the credit card offer you like best does have an annual fee, ask the issuer whether it will waive the fee for you. Most companies will. They assume that the only people who will let the fee stay on their contract are the inexperienced credit users, and the more savvy customers will ask them to waive the fee as part of the application process.
* You should not have to pay a weekly or monthly fee. Period. These fees are a sign that the card was designed to gouge people whose credit rating is so poor that they cant get a card anywhere else. They should not appear on any legitimate student credit card agreement. If you see them, dont waste time asking the company to waive the fees. Throw the application away.
*Make sure it wont cost you to pay your bill by phone. Many credit card companies allow you to pay by phone either routinely, or as an emergency measure when youre about to miss a deadline. Paying a small fee for emergency payments is acceptable, if not optimal. Making a routine payment by phone shouldnt cost anything.
* Check the companys reputation online. Do they routinely raise interest rates without telling customers? How is their customer service? If you find significant problems, avoid the company.
Student credit cards can be an excellent foundation for your credit rating, but be choosy about which ones you sign up for. The right cards will help you to build a sound financial future. The wrong cards will saddle you with hundreds of dollars in fees and thousands of dollars in extra interest payments. Do a little research before you choose student credit cards, and youll know which card offers to choose.
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