The excitement of becoming a young adult with new freedoms is undeniable. Perhaps you’re excited to figure out where you’re going to live, about having endless time with your friends, heading to college or university, and maybe that you’re finally getting the opportunity to work towards a career.
Unfortunately, with this comes some responsibility and of course there’s that one major thing that may slow down your excitement, money. College and university education is expensive and it can be overwhelming for students and parents.
The cost of living continues to go up as inflation rises, and there’s a whole new world of finances you need to learn about.
There’s lots going on but it’s finally time to get your first credit card. Applying for a credit card is a big deal, and learning how to use one is vital. The big question is, what to know before applying for a credit card?
Here are 7 details you should be aware of prior to getting a student credit card.
What You Should Be Aware of When Getting a Credit Card
- Credit Limit– Your credit card will give you a limit as to how much you can spend. Your card should have a limit that is sufficient for what you need. The less of the limit amount that you spend, the better your credit score will be.
It’s recommended that you spend about 30% of your credit limit a month, to earn points on your credit score. This is referred to as credit utilization. Keep in mind you should consider a limit that will allow you to be responsible with your card.
- Any Annual Fees- When applying for a credit card, look for cards that will not charge you every year. Student credit cards usually don’t have annual fees.
- Card Interest Rate- The interest rate on your card will be a big factor if you do not pay your full balance. When applying for a credit card, consider getting one with a lower interest rate just in case you do end up making partial payments. Many student cards have an interest rate of 19.99%.
- Grace Period- Different cards have different grace periods, or days in between payments. Having a longer repayment period just in case you’re not able to meet your payment date is always a benefit. Shop around to see how many days of the “free loan” you can get as you don’t pay anything until after the due date.
- Does this Card Report to the Major Credit Bureaus- Better credit providers are likely to use the same platforms, making it easier for them to see your credit report when necessary. See if your card reports to them. If you are using your card wisely, you’ll benefit from having a good credit score for getting more loans in the future.
- Can You Upgrade in the Future- It’s worth knowing if there is a version of your card that will benefit you greater down the road, with better terms for your circ*mstance. This will mean you don’t necessarily have to get a new card to get better terms.
- Benefits or Rewards- Different cards have different rewards. Some give you points you can redeem for travel or goods, and some give you cash back. Find out what the card offers and see if you will benefit from it. It’s worth shopping around for a card that will get you the most rewards benefits.
Read the Fine Print
Often the fine print on your application form will have many of these details. The rates that you will be paying can dictate how long it takes you to pay off your credit card if you get stuck with a balance. Always know what they are in advance.
Ask lots of questions and know exactly what your terms are before signing up for a credit card. If you’re still thinking about what to know before applying for a credit card, know that credit card companies are in this to make money.
Do your due diligence to reduce the fees you pay as there are many options available for students.
By:Robert Puharich| September 18, 2021 |
