BY MARTHA KARN
Should college students have credit cards? The answer depends on who you ask. Some worry that credit cards make it too easy for students to spend beyond their means and rack up debt. Others believe credit cards enable students to learn about fiscal responsibility and build good credit. Ultimately, the right answer depends on you, the student.
As long as you can handle this type of responsibility and not get over your head with credit card debt before you even graduate, having a credit card can be very helpful, especially in emergencies. But, you need to make sure that you are getting the right credit card for you. Today we are going to look at some tips on how to choose a student credit card. Let’s get started.
Check Your Eligibility: There was a time when credit card companies were practically begging students to sign on with them, and a lot of students who weren’t ready for this type of responsibility were getting into a lot of credit trouble. Now, thanks to the Credit Card Act of 2009, credit card companies can’t market near campuses. What’s more, applicants must be 21 or older, or have a co-signer, and provide proof of income.
Foreign Transaction Fee: If you are going to be traveling, it is a good idea to look for a credit card that doesn’t charge a foreign exchange fee. Some cards charge as much as an additional three percent per transaction on purchases made in different currencies. If you are studying abroad, make sure that your card doesn’t charge this fee, because it can really add up over time.
Credit Monitoring Tools: Look for a credit card issuer that also offers credit monitoring tools, including free credit scores and credit monitoring. Even if you aren’t planning on getting a credit card right away, it is still a good idea to use some of these free tools so you can keep an eye on your credit rating. If you aren’t eligible for a credit card now, using these tools can help you to build your credit so you will be eligible later on. Companies that offer these tools tend to be the best credit cards for students.
Look for No Annual Fee: The rewards you’ll accumulate with your credit card probably won’t offset a steep annual fee. So look for a card that doesn’t charge one. Chances are, you’ll find a solid no-annual-fee credit card that works well for you. Other fees add up, too, though. So do diligent research to make sure you the card you select has among the lowest total fees, such as balance transfer fees, cash advance fees, expedited payment fees, etc.
Good Grade Incentives: Did you know that some credit companies offer incentives to students for getting good grades? Some companies offer cash bonuses, while others may offer such perks as a higher line of credit once you have made a certain amount of payments on time. Some may even offer to lower the interest rate. The more rewards, the better, as long as they aren’t just smoke screens to get you to take a high-interest credit card that you will never be able to pay off.
There are Other Options
Maybe you aren’t ready to have a credit card, do not want one, or are not eligible. There are always other options to having your own credit card. For instance, some credit companies will allow you to be an authorized user on a parent’s credit card. Potentially, this could be a good way of building your credit. Better yet, you aren’t legally liable for the monthly bill (though you’ll certainly be responsible to your parents). Alternatively, you may want to look into getting a secured credit card — a card that has no actual credit, only money that you deposit into the account.
Martha Karn develops online educational courses and writes for students.