Credit cards aren’t high on most university students’ priority list of things to take care of; after all, students with loans, as well as students receiving financial assistance from their parents, may pay for things with direct debit from their bank accounts.
The simple truth is that most students don’t think about credit cards, so when they do need one, they rush through the selection process, ending up with a card that isn’t optimal for their needs or, worse, one that is actually detrimental to them in the long term.
So, what should a student who is looking for a credit card do? Simply said, they must conduct research! Examine a selection of student credit cards and their perks and cons. Only choose one that you are comfortable with and that meets your needs well while not causing you too many problems.
So, what qualities should you seek? So, here are a few things to consider when looking for the best student credit card.
Fees
Some cards demand an annual fee for use; I advise students to avoid these cards because the benefits they provide are usually insufficient to compensate for the fact that you must pay for them. You already have good tuition, textbooks, housing, and many other things to worry about; there’s no reason to add another to the list.
Annual fee credit cards are intended for business people who spend a lot of money and have a lot of spare income, not for students on a tight budget. As a result, most cards will not charge such a fee. If they do, think about whether you actually need the perks of that particular credit card before signing up for it.
Spending Caps
When I began my first year of college studies, the first credit card I applied for had a $500 credit limit, which turned out to be more than I required at the moment. As I progressed through university and my general expenses increased, I applied to have that limit raised to $1000 and added a second card with a limit of $1500 – this was mostly just for when I bought textbooks or paid for tuition, as I wanted to get the most out of my credit card bonus plans, but it was a good example of me making the most of the cards.
Incentives
Incentives are benefits attached to credit cards by firms in order to persuade more individuals to sign up for them. A typical example of this is the “cashback” card, which refunds a tiny percentage of what you spend on your card.
The supermarket card, which was distributed by one of the grocery store chains where we resided, was a popular credit card among my acquaintances. Instead of direct payback, they offered a store credit worth twice as much as typical cashback plans at the time, which appealed to many students.
Rates of Interest
This should never be an issue if you pay off your balance each month and hence never incur interest on your account. However, in practice, things don’t always work out that way. As a result, interest must also be included.
The industry average for yearly interest rates, compounded monthly, is around 19-23%. However, as a student, you should take advantage of the discounts that are available to you; if you do your research, you should be able to locate a card that meets your needs and has a student discount interest rate in the 10-15% area.
While 10% may not seem like much, if you ever lose your job, have to resign, or have another unexpected catastrophe that affects your money, the interest can soon add up. One method to mitigate this is to start by looking for a cheaper interest rate.
These are the four key elements of a student credit card that you should consider before deciding which one you require.
Finally, your pick should be guided by your current needs and the card that you believe best meets those demands. A solid credit card, paired with smart spending and strict budgeting, can really help you as a student by providing benefits that you would not ordinarily obtain from your purchases.
