Choosing your first credit card as a student can be confusing. With little or no previous credit card knowledge or experience, it’s easy to pick the wrong credit card. Unfortunately, choosing the wrong credit card can lead to serious credit problems that affect your life for years to come. Here are some of the most important things to consider as you choose your first student credit card.
Reputable credit card issuer.
Picking a credit card from a reputable credit card company is a step in the right direction. Reputable credit card companies typically have more consumer-friendly credit card products – after all, they have a reputation to maintain. Look for a credit card from a well-known bank or credit union.
Low interest rate.
The interest rate on a credit card affects how much you have to pay whenever you carry a balance from month to month. Lower interest rates, as expressed by the APR or annual percentage rate, are less expensive and help you save money in the long run. Comparing various student credit cards will give you an idea of the kind of interest rate you can expect to pay.
No annual fee.
There are times that it makes sense to pay an annual fee – if you’re signing up for a premium credit card with great rewards, for an example. As a student just starting out with credit, you want to avoid paying a credit card annual fee. Be wary of credit cards that start out with no annual fee in the first year, but charge the fee in the second and subsequent years.
Rewards program.
Rewards are a nice-to-have with student credit cards, not a necessity. As you’re just starting out with credit, earning credit card rewards are a nice bonus for your spending. However, it’s important that you aren’t tempted to spend more than you can afford just to earn additional rewards. Also, if you choose a credit card with a rewards program, make sure you pay your balance in full to eliminate the risk of getting into debt and to avoid paying interest.
Free credit monitoring.
Many credit card issuers offer automatic free credit monitoring with their credit cards. This can be especially beneficial or students just starting out with credit. The free credit monitoring can help you see how your credit card usage is helping or hurting your credit score.