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For most university students, taking care of credit cards isn’t high on their priority list — after all, students with debt can pay for things with direct debits from their bank accounts, as can their financial aid. Its being done. Guardian.
The simple truth of the matter is that most students don’t think about credit cards, so when it gets to the point that they need one, they rush through the selection process, eventually getting one. which is not optimal. For their needs or worse which actually proves harmful to them in the long run.
So what should a student who is asked for a credit card do? Simple, they need to do research! Check out the different types of student credit cards, their benefits and their drawbacks. Just choose one that you feel comfortable with and that you think meets your needs well, while not giving you too many setbacks.
So what features should you be looking for? Well, here are some things that you should keep in mind while looking for an ideal student credit card.
fees
Some cards charge you an annual fee for their use; I like to advise students to stay away from these types of cards, as their good grades usually aren’t enough to outweigh the fact that you have to pay for them. You already have good tuition, textbooks, residency, and so many other things to worry about, there’s no point in adding any more to the list.
Credit cards that charge an annual fee are more aimed at business people who spend a lot of money and have a lot of disposable income, not students on a fixed budget. As a result, most cards will have no such fee. If they do though, consider whether you really need that specific credit card’s benefits before signing up for it.
spending limit
When I started my first year of graduate study, the first credit card I applied for had a credit limit of $500, and it exceeded what I needed at the time. As I went through university and my normal expenses increased, I ended up applying to increase that limit to $1000 and added a second card with a $1500 limit – this was mostly when I bought textbooks or paid for tuition Paid for, as I wanted to get the most out of my credit card bonus plans, but this was a good example of me getting the most out of the cards.
Incentives
Incentives are bonuses that companies attach to their cards to attract more people to sign up for them. A good example of this is a “cashback” card, where a certain small percentage of everything you spend on your card is returned to you.
One credit card that was popular among my friends was the grocery card, offered by a chain of grocery stores near where we lived. Instead of straight cashback, they offered a store credit that was twice the value of most cashback schemes at the time, the practicality of which attracted many students.
Rate of interest
Ideally, this should never be a problem, as you’ll be able to pay your balance in full each month and thus never earn interest on your account. In practice, though, things won’t always work out this way. Therefore, interest should also be a concern.
The industry average for annual interest rates is somewhere in the 19-23% range, compounded monthly. However, being a student should take advantage of the discounts available to you – if you do your research, you should be able to find a card that suits your needs with a student discount interest rate in the 10-15% range.
While 10% may not sound like a lot, the interest can add up very quickly if you ever lose your job, have to quit or have some other unforeseen event that affects your finances. One way to partially prevent this is to intentionally look for a lower interest rate first.
These are the four main aspects of student credit cards that you should check before choosing the one you need according to your preferences.
Ultimately, your decision should be guided by your needs at the time, and which card you feel best meets those needs. A good credit card, with careful spending and a very strict budget, can really help you as a student and provide you with benefits that you might not otherwise get from your purchases.
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