Getting the Most from Student Credit Cards
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by: barrywaters
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Word Count: 474
Now that you are a college student, credit card companies are going to court you with a passion you only wish you could see from prospective boyfriends or girlfriends. As far as the credit card companies are concerned, you are a dream date: young, with an unmarked credit report and (they hope) bound less naivete about credit cards. They expect you to accept a credit card with an attractively low introductory rate, run up huge bills, then owe them tons of cash when the introductory period ends and your interest rate skyrockets. Lets disappoint them.
The first tip is to ignore the huge, sparkly "0 percent interest" printed in bright red and gold letters on the front of the brochure. Thats nothing but an introductory rate. After as little as six months, it goes poof, and suddenly everything you charged to the card is accruing interest at the cards real interest rate. The interest rate on a student credit card is typically a little higher than the rate for an older persons credit card, and is currently around 13 to 20 percent. Student default rates zoom up to 25 to 31 percent if your payment is even a day overdue. The higher rate is retroactive, so regardless of what the rate was when you bought something, you will be billed at the higher interest rate until you pay your entire balance off. Once the interest starts compounding, you could pay two or three times as much as the item is worth.
The key is to choose a card with the lowest possible regular interest rate, then spend as though you were already paying that rate on your purchases. To puzzle out which interest rate is a credit cards real rate, look for the fine print or find the chart that lays out the rates. Find the standard purchase annual percentage rate (APR) and the standard cash advance APR. These are the rates you will pay after the introductory period ends. Compare all the student credit card offers you have received, paying no attention to the introductory rates and all the frequent flyer miles or other frills. The only numbers you care about at this stage are the standard purchase APR and the standard cash advance APR.
Once you have found the credit cards with the lowest regular interest rates, read the rest of the fine print for catches like annual fees and high default interest rates, and use it to narrow your selection. Now that you have a few likely offers with low interest rates and no nasty surprises, you are free to consider rewards packages and pick the student credit card you like best. Have fun with your new credit card and start laying the groundwork for your future credit... on your terms.
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