Choosing a Student Credit Card

Choosing a credit card is a combination of several factors:

• What can/do you qualify for?
• What are the terms?
• What type of card do you want?
• What are your parameters?

The order in which you approach these will depend on how strong your feelings are about certain elements, as well as your financial situation. But in any case, this article will give you some hints about what to look for.

Qualifying

Since most college students have little or no credit history to qualify them, the cards offered for students may be ideal because the typical college student’s situation is a given. Some students may be in a different situation for various reasons, for example, military service, public service, or simply being older than their cohort and having worked and perhaps bought a car already. Students in this situation may have more opportunities available without having a cosigner required.

Types of Cards

Cards are categorized differently by different reviewers, but here are some types of cards that you may wish to consider, along with brief descriptions:

• Student cards - these cards are designed with the situations and needs of students in mind.
• Cash back cards - these cards provide a percentage of cash back on all purchases or purchases of specified goods and services or at specified merchants’ establishments.
• Frequent Flyer cards - these cards reward you with miles or points which you can trade in for air travel. Some specify an airline, while others do not.
• Rewards Cards - these cards offer various incentives, some of which are very broad and others of which are specific to a specific product line or type of merchandise.
• Sports Cards - these cards are a specialized type of rewards card that uses sports merchandise as its incentive. It may also have special rates when the card holder purchases sports equipment
• Gas Rewards Cards - these cards are another type of specialized rewards card that helps you get some good out of the high gas prices these days.

Whichever type of card you are considering, you will want to make sure that it is accepted at the places at which you need to or prefer to make your purchases. You may find, for example, that Discover cards - while perfect for Sears, where you can pay your bill, by the way - may not have the wide acceptance that VISA or Master Card does.

Card Terms

Knowing the meaning of these terms will help you as you explore the world of credit cards. This list not only defines the terms’ meanings, but you could use it as a checklist for the types of items you should consider when comparing various cards’ features and limitations.

Annual Fee - a fee charged each year to a customer’s account for the privilege of using a credit card. Not every credit card has an annual fee, but it can run from $15 per year to $300 per year.

Annual Percentage Rate - abbreviated APR, the yearly rate of interest paid to instantiate the loan.

Billing Cycle - the number of days between statements

Billing Statement - the bill with a summary of purchases, payments, charges, and balance that the credit card issuer sends to the card holder each month.

Cash Advance Fee - in general, credit card companies charge more for the card holder to use the card to obtain cash than they do for a purchase. In addition to a higher interest rate, there will likely be a cash advance fee stated as a flat fee or percentage, depending on the amount sought.

Credit Line - the limit of how much balance the card holder may have.

Grace Period - the period of time that a credit card holder with no balance has to pay off the balance without incurring an interest charge. Grace periods are generally from 20 to 30 days. Carrying a balance removes the grace period as far as interest charges, but it still holds for designating when payments are due.

Index - a standard figure from one of several sources, used as the basis to determine changes in interest rates for credit card debt.

Indexed rate - the result of adding the index with a margin.

Introductory Rate - a lowered rate charged by an issuer for an introductory period in order to “sell” the credit card holder on the card. After the introductory period ends, the interest rate changes to an indexed rate or a stated interest rate.

Late Charge - a fee charged when the card holder makes a late payment.

Late Fee - a statement amount that is received after it is due.

Margin - the amount the card issue adds to the index to determine the indexed rate.

Penalty Rate - a higher annual percentage rate that a card holder incurs after making either one or sometimes two late payments.