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.

Important Choice

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.

People offering credit cards to students are everywhere on campuses these days, and for good reason. The students may become lifelong card holders, and despite the bad hype surrounding credit cards, students should have one.

This is not to say that using credit cards isn’t a possibly dangerous financial choice, and students should consider some great points before signing their name on the dotted line. However, if used properly, student credit cards for students can be great tools to learn about financial responsibility, help them gain credit, and also provide a convenient method for paying for expenses.

Interest Rate after Sign on Period

Card issuers may use various methods to get a student to sign up for their card, including offering a lower, or even no interest rate for a specific period after the student gets the card. It is easy to just pay attention to this number, but comparing cards to get the best interest rate after the initial sign up period may save a student a lot of money down the line.

Check Your Bank

While you may get a free gift for signing up at a kiosk on campus or at a sporting event, these cards may come from a company you are not familiar with, and there may be surprises that come up when dealing with them. If you have a checking account, you may be able to get a student card from the company you are already banking with, who already has some information about your financial responsibility. The student may also be able to make automatic transfers to pay their bill if using a company they have a checking account with also.

Decent Limit

While having a high limit can be an enticement to spend money, having available credit is very important. Many hotels and rental car agencies will put a hold on a credit card in a large sum, which would require the person to have this as available credit on their card. Having a card with at least $500 of available credit is a good starting point. At the same time, having a limit that is too high (several thousand) can lead the student to make impulse buys that they may have a hard time paying back.

Rewards Programs

A student may find that they are regularly using their card due to its convenience. In this situation, having a card with a rewards program may bring great benefits to the students, as they may be able to earn points towards large purchases, or airline tickets to visit home. Normally these reward programs continue for the student after they leave college if they keep the card with the same issuer.

How many?

It has been said that the average college student has five to seven active credit cards. Having this many cards can possibly look bad on a credit report, as it shows as revolving credit, and can be a temptation to spend money that the student doesn’t have. This can lead to a bad situation on a credit report and cause the student to start their adult life buried in debt.

Annual Fees

Some cards come with annual fees that come out of the credit limit and the student is required to pay back each year. A student with no credit, or even a little good credit, should still be able to qualify for a card that doesn’t come with this unnecessary cost.

Special College Student Programs

There are also cards that offer additional programs targeted specifically at college students. They may provide rewards for paying on time, or event for receiving good grades. Taking advantage of these benefits may provide additional points towards purchases without having to even use the card any more than they were.

In Conclusion

While it is true that misuse of a credit card can be dangerous and will have lasting effects on a student’s credit, using a card wisely will also allow a student the ease of paying for purchases quickly, help build their credit, and allow them to use services they may not be able to otherwise. While there are many options available, students will want to look around to ensure they are getting the card that is right for them and will provide them the most benefit without all the hassles.