Are Student Credit Cards A Good Idea?
Enrolling in college can be a difficult time for most college students. They no longer live with their parents and can no longer easily obtain money from their parents if they run out of cash. The financial needs of these students are the reason why many lenders offer credit cards geared towards students. These cards work in the same way as conventional credit cards, but the terms, rates, and payment plans may be different depending on the lender issuing the credit cards.
The Interest Rate
There are several features that should be reviewed prior to applying for any credit card. The first is the interest rate applied to credit card, which can differ significantly between credit card issuers. The interest rate for these credit cards can range from 7% to as high as 30%. Many student credit cards start with a 0% interest rate that increases to 20% or more after the first 12 months that the account is open.
It is important to read the credit terms and conditions carefully to be certain that the credit card is charging an interest rate that is fair and that the original terms will not change dramatically after a specific period of time. The average interest rate for student credit cards is around 15%, so avoid applying for a credit card with an interest rate that is higher.
The Fees
Another important piece of information to review is the fees charged for using the credit card. The best credit cards geared towards college students will not have an annual fee that must be paid for the privilege of using the credit card. The terms and conditions of the credit card will disclose the fees that are associated with the credit card and their amounts and there are many different fees that can be required by deceitful credit card lenders.
The annual fee is the most prevalent fee for credit card accounts and it can range from $50 to $150 per year. This fee is automatically charged to the account on the anniversary of the account’s opening or at the beginning of the next month, so there is no way for the student to avoid paying the fee. If the annual fee charge shoots the credit card over the limit, the student will be responsible for paying those penalty fees as well as the annual fee. By carefully reviewing the terms and conditions for using the student credit cards, any student can ensure that they are not being taken advantage of by unscrupulous credit card lenders and paying more than they should for a student credit card.
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