What Students Should Consider Before Getting A Credit Card
Buying items using your credit card can provide several benefits. For one, a credit card is safer than carrying cash whenever you’re shopping since you can easily cancel your credit card the moment it’s stolen. A credit card can also improve your credit score and help you earn points.
Although beneficial, owning a credit card also comes with risks. Abusing your credit card can lead to high-interest rates, a bad credit score, and even bankruptcy. Instead of improving the quality of your life, mishandling your credit cards can lead to a lot of financial stress.
For students who want to make the most of out their credit cards and avoid any problems when using it, make sure to consider the following before buying:
1. Your spending habits
Buying a credit card when you’re still a student comes with several pros and cons.
Since you still don’t have to pay your own bills, as you’ll likely depend on your parents, buying a credit card during this time can be a great platform for starting your credit score. This is especially true if you’re able to pay all of your interest rates and debts on time.
On the other side of the coin, since you’re still relying on other people for your finances, buying a credit card as a student can also mean limited options.
Most credit card companies will look at your income to determine your credit limit. The bigger your income is, the more perks you can enjoy from your credit card.
When buying a credit card as a student, your spending habits should be your first consideration. Are you planning to regularly pay off your card every month? Or do you see yourself carrying balances every month? Will you use your credit card for emergencies or daily purchases?
With the number of credit cards available for students, it’s important to know what your spending habits are so you’ll end up choosing a credit card that perfectly fits your lifestyle and financial stability. This can lessen your stress in paying your balances in the long run.
2. Interest Rates
In order to entice more people to open an account with them, credit card companies will usually market their credit cards with zero interest rates.
This kind of offer might seem like a great deal for students like you, but if you do plan to buy a credit card from a company that offers zero interest rates, make sure that you also inquire about their interest rates after this promo period.
Buying a credit card that has zero interest rates for the first month and then charges you with over 20% interest rate the month after can be very stressful. This is especially true if you don’t have any idea that their interest rates can actually increase.
Before buying a credit card with zero interest rates, take the time to scout for options, and inquire about their usual interest rates.
You should at least reach out to three credit card companies and compare their interest rates. The more credit card companies you talk to, the easier it’ll be for you to find a company that offers a low-interest rate.
Asking around and calling credit card companies about their interest rates might be taxing, but these tasks are actually necessary, especially students who don’t have a stable source of income.
Knowing how credit card companies charge interest rates can help you save more money in the long run and prevent you from making costly mistakes.
3. No annual fees
As the name suggests, annual fees are payment that you make to renew your account under a credit card company. Paying for annual fees allows you to use your credit card for another year.
Although paying annual fees might seem like a common practice when you have a credit card, don’t be fooled.
There are actually several credit card companies that allow you to use your credit card every year without paying for any annual fees. Buying your credit card from these companies can mean more savings for your pocket.
For you to find credit card companies that don’t require annual fees, start asking your current bank and credit union. Do some research online and ask some adults for recommendations, too.
Decide with caution
Aside from knowing what to consider before buying a credit card, it’s also important that you know how to effectively manage your credit card.
Owning this piece of plastic will require responsibility and discipline from you. If you want to have financial problems in the future, you should be able to meet these requirements.
Use this article as your guide when buying your credit card. Regardless of the reason, you should never buy one hastily as this can only do more harm than good in the long run.