The tips for getting the best student credit card aren’t that different from getting any credit card. You need to make sure your credit report is clean and do your homework on what the credit card companies are offering. One of the main issues to understand about credit cards is that they are all different. The fees and interest rates and terms for credit cards can be miles apart, so it is important that you know what you are signing up for. You have to look at the options to get the credit card that’s right for you.
Tip Number 1 – Your first Credit Report
As a student, you may not have much on your credit report. But you still need to make sure that what is on it actually belongs to you. This is a great time to look at your reports and start paying attention to your credit rating. In this day and age, the credit reports are sometimes looked at by prospective employers. Having erroneous information on your report can do lasting damage. So before you consider applying for any credit card, take a look at what has been reported on your credit history.
Interest rates and terms for credit cards will be dependent on your credit rating or the credit rating of your co-signer if you are under 21 years old and will need a co-signer to get a credit card. The first step should be making sure that your credit report is as clean as you can make it.
There are several services that offer you to see your credit report for free. One of these services is https://www.annualcreditreport.com/cra/index.jsp. Once a year this central site allows you to request your free credit report from all three of the consumer credit reporting companies. These three nationwide companies are Equifax, Experian and TransUnion. Once you’ve looked at your report you can usually submit online any changes or discrepancies that you find.
It isn’t unusual to have erroneous information on the credit report and often you can send in the discrepancies through an online process. It will take about ten minutes online to fill out the information and get the reports. Then as a student with little or no credit it should just take you a few minutes to review the reports and verify information. If there are mistakes or corrections to the report it can take up to thirty days for the incorrect information to be verified and removed.
Tip Number 2 – Comparing Companies and Cards
Some things are easy to compare. Like annual fees. The card either has them, or they don’t. Interest rates are more difficult. Is there an introductory rate that only lasts for six months or so, then goes up? Is it a set interest rate, or variable? If the rate is variable, what is it tied to?
If you are looking at and comparing introductory offers, make sure you know how long the introductory rate lasts and what the rates and terms will be once that time has expired.
Tip Number 3 – Other Options
There are other options besides a “regular” credit card. Depending on what you need, your credit history or how you plan to use the card one of these other options might be something to consider.
Secured Credit Cards
One option for students might be a secured credit card. This type of credit card requires a security deposit on the account in the amount of the credit limit. The deposit is held in a special savings account that will accrue interest, but can’t be accessed by the account owner.
The credit card can be utilized for any purchases, including for online purchases. After the card holder has made consistent on time monthly payments for a year, the card issuer will generally re-evaluate the account and release the security deposit. At this time the card holder will be assigned a credit limit.
Prepaid "Credit-Cards"
These cards are not actually credit cards but are a type of stored value card. There is no credit check for these types of cards and no interest is paid. The parent or student simply makes a deposit to stores money on a card.
The cards can be used for online payments and purchases and they are branded by Visa, Discover or American Express. These prepaid cards can be used just like any credit card. The money stored on the card is reduced each time the card is used. Make sure you understand any fees associated with the pre-paid card.
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A student credit card is a credit card generally issued to 18 to 21 year olds that are attending college. New laws and regulations will require the student to prove they have the means to pay for the charges placed on the card, for example having a steady job. Or they have to get a co-signer for the card that is over 21 years old, can prove they have the means to pay the charges on the card, and will take responsibility for those charges if the student doesn’t pay.
Below you’ll find three questions that are frequently asked about student credit cards.
Should I get a Student Credit Card?
This is a question only you and your parents can answer as there are many considerations. A student credit card can be a very good thing. It can help you establish a positive foundation for the future as landlords, insurance companies, and even employers will often use your credit history to help them make a decision on hiring you, allowing you to live in their property, or to set your insurance rates.
You will need to asses when and how you need to use a student credit card and determine how to ensure you meet the monthly payments.
There are so many options out there that you do need to take the time and look at several card offers before making your decision. Make sure you compare things like annual fees, interest rates, penalties and any other fees and terms for the card. Often card issuers will have introductory offers.
It is important to compare the introductory offer and term, as well as the fees, interest and other terms for the cards once the introductory term expires. Make sure you understand how long the introductory term lasts. New regulations require that it be at least six months, but it could be longer.
Where can I get a Student Credit Card?
If you already have a checking or savings account, check with your bank and see if they offer student credit cards. You can also check specific credit card websites, or do an online search comparing student credit cards. Many credit unions offer credit cards that will have a lower interest rate without all the rewards options or annual fees.
The online sites that compare student credit cards will often provide you the information on the top four to eight most popular student credit cards. They should break down the fees, interest rates and other terms and benefits for each specific card.
They will usually allow you to apply for the student credit card online. Some of the sites will take you through a selection process to help you determine which option makes sense for you based on what you plan to use the card for and your personal circumstances. Many of the sites will offer information on how to use the student credit card responsibly, how to budget for a credit card and how to protect your credit rating.
A few of these online sites are studentcreditcards.com, studentplatinum.com, credit.com, and findcollegecards.com. You can also do an internet search for compare student credit cards and find similar sites.
What are these new credit laws I keep hearing about?
Companies issuing credit cards to students, and everyone else, have new rules and regulations to govern their lending habits. These new rules start taking affect beginning the third week of February 2010 and all will be in place by August 2010. The new credit regulations are intended to protect consumers and keep them informed about the credit cards they use.
Student Credit Cards are specifically affected by the new regulations. Now companies are not allowed to offer on campus students free gifts just for applying for the credit card.
The other main change to the rules for students it the one we mentioned above where an under 21 year old will have to show they can repay the debt on their own, or they will have to get an adult to co-sign. The co-signor has to agree to take responsibility for the debt and prove that they can pay for it.
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Companies issuing credit cards to students, and everyone else, have some new rules to abide by beginning the third week in the month of February 2010 and more that take effect as of August 2010. The new credit regulations are intended to keep the consumer informed and make sure they understand what they are signing up for and what the credit card will ultimately cost them.
New Credit Card Regulations
Student Credit Cards are especially affected by the new regulations that say companies cannot offer students-on campus-free gifts just for applying for the credit card.
But, what about those students that live off campus, can they still be enticed to sign up for a credit card by the offer of free gifts? The answer is yes, but there are rules and regulations that will govern some of these offers.
One of the new rules governing student credit cards states that the companies cannot allow under 21 year olds to sign up for a credit card unless the student can show means of repaying the debt himself, or they can get an adult to co-sign for him. The co-signor has to agree to take responsibility for the debt and prove that they can pay for it.
Changes In Monthly Statements
The monthly statement will also have some healthy changes. For one thing, the company now has to tell you how long it will take you to pay off your account if you continue to simply pay the minimum balance. That will be a shocking revelation for some as it generally takes a lot longer than you think. They must also inform you what monthly payment you need to make to pay the balance off within three years.
Another regulation that changes the monthly statement is that the company cannot change the billing date to a shorter cycle after the date has been set. The statement also has to be delivered to the card holder 21 days before the due date. This is to give the holder enough time to make a payment by the due date.
Nor can the company charge a fee any longer for payments made online, by telephone, or by mail-unless the payment is made on the day before or on the due date itself. The card holder has to make the payment within a reasonable time for the company to process the payment.
What They Can’t Do
Credit Card Companies have, for a long time, been able to charge late fees in such a manner that the card holder would actually be paying fees and late charges on amounts that had already been paid. This practice was referred to as double billing or two-cycle billing. They can no longer utilize this billing practice.
They can no longer raise the interest rates without notice, or retro-actively. The company issuing the card now has to give the card holder 45 days notice before raising the interest rates. And even better, their famous promotional interest rates have to be left in effect at least six months and unless the card holder has been told upfront that the rate changes in six months, the interest rates cannot be changed for a full year.
Summary
There are some good changes to Student Credit Cards with this new law, and some changes that affect all credit cards. You still need to read the fine print on your credit card statement as that’s the only way you will know exactly what interest and fees your company is charging you.
Companies will still be charging different interest rates. You need to understand what your cards fees, interest rates and terms are as they vary widely. Statistics show that over 75% of card holders have no clue what the fine print on their statements says, or what the interest rate is on a particular card. This percentage is expected to be higher in the student population.
You can manage your credit cards by reading your statement and knowing what it is that you are paying. If you are looking into getting a credit card make sure you do a comparison on the cards that are available.
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A student credit card isn’t really different from a regular credit card. They work the same. They might look a little different as credit card companies have tried to appeal to the students by either allowing them to personalize the card with a picture, initial or by choosing a few preset options. But the small plastic cards still enable the student to purchase goods and services on credit, with the promise to pay at a later date.
The card issuer can be a bank or other financial institution, or the cards can be issued by the retail store or service company for their specific product. The card issuer sets a limit to the card holder and based on how payments are made, the card holder may raise or lower that limit.
Having a student credit card can be a great way to establish a credit history. But these credit cards often carry a high interest rate. A quick perusal of rates showed that percentages varied widely from a credit union credit card of under 10% with no fees and no reward offered, to cards with an interest rate of over 21%.
Credit Card versus Charge Card
Student can get either a credit card, or a charge card. Even thought the terms are often used interchangeably, there is a difference. A charge card requires you to pay the total balance of money charged to the card at the end of each month. They usually have an annual fee, offer rewards and if you pay the entire bill each month, there is no interest charged. An example of this type of card would be the traditional American Express Green Card.
A credit card would allow the student to carry a balance forward and pay anywhere from the minimum monthly payment, to the full amount charged to the card. With a credit card, interest accrues each month on the balance left over after a payment is made.
New Rules And Regulations
There are new rules and regulations that will take effect as of August 2010 that specifically address student credit cards. An adult cosigner is now required for all students or anyone that is under 21 years old, unless the under 21 year old can prove they have consistent means to pay for the credit card. The adult co-signer will be asked to assume responsibility for the credit card payments and to prove that they can afford to make those payments if the student defaults.
Another rule that affects students under the new laws is that the credit card companies will no longer be allowed to market on or near campus if they offer promo items like free pizza or gifts if the student fills out a credit card application.
These new regulations are designed to stop students from getting a credit card, defaulting and leaving their parents liable for the credit card debt when they didn’t even know that the student had a credit card.
Secured Credit Cards
One option often offered to students is a secured credit card. This type of credit card requires a security deposit on the account. That deposit generally equals the credit limit. The deposit is held in a special savings account; it does accrue interest, but can’t be accessed by the account owner. The credit card can be utilized for any purchases and after having the secured credit card for a year and establishing a history of on time payments, the card issuer will generally re-evaluate the card holder’s status. At this time if the payments have been made on time, the security deposit is released and a credit limit assigned to the card holder.
Prepaid &Credit-Cards"
These cards are not actually credit cards but are a type of stored value card. There is no credit check done for these types of cards. The parent or student simply makes a deposit that stores money on a card. These prepaid cards carry a credit-card brand like Visa, Discover or American Express, and can be used just like any credit card. The money stored on the card is reduced each time the card is used.
Prepaid cards can be given to students as young as thirteen years of age. There is no interest on these cards, there is sometimes a fee to purchase the card and there may be monthly fees or “non-use” fees if the card is not used in a specified period of time. As with any type of credit card, make sure you verify all the fees.
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One of the true facts of our times is that all credit cards are not created equal. The fees and interest rates and terms for credit cards vary so widely that comparing companies and cards can be a real feat. But you have to do it to get the best credit card for you.
Tip Number 1 – Start With Your Credit Report
Often the interest rates and terms for credit cards will be dependent on your credit rating. Getting the credit card is definitely dependent on your rating and the information on your credit report. So the first step in shopping for a credit card should be making sure that your credit report is as clean as you can make it.
Go to one of the services that allow you to pull your three credit reports for free and take a look. Try https://www.annualcreditreport.com/cra/index.jsp. This is a central site where you can request your free credit report, once every twelve months. You will get information from all three of the consumer credit reporting companies. These three nationwide companies are Equifax, Experian and TransUnion. This site will also allow you to submit almost all of the changes or discrepancies online.
It isn’t unusual to have erroneous information on the credit report and often you can send in the discrepancies through an online process. It will take about ten minutes online to get the reports, a few minutes to an hour or so to scan the reports and verify information, and up to thirty days for the incorrect information to come off.
Tip Number 2 – Compare and Contrast
Start with the basics. Is there an annual fee, and how much is it? What is the interest rate? If you are comparing introductory offers for credit cards, make sure and take that next step and compare how long the introductory offer is for, and what the terms and conditions are once the introductory term expires.
As you are comparing the basics, take a minute and consider how you will be using the card. For instance, if you travel a lot, does the card provide flight insurance or car insurance on rental cars? If you travel overseas, what are the fees to convert charged purchases from the currency of the country you are in, back into US currency? This fee can vary from 0% (Citibank Visa) to 3% and over.
Tip Number 3 – All Visas Are Not Alike
Nor are all MasterCards. These cards are offered by different banks, credit unions, etc and each offering is going to be different. For instance, my credit union Visa has a 9.9% interest rate that hasn’t varied in over five years. The bank down the street has a 13.9% interest rate, and an offer I received in the mail today for a new Visa Card…17%.
What does stay the same is American Express. They have different types of cards, but they all come from the one company and the interest rates and fees are set by product and your credit rating. The same with Discover Card. You get the Discover Brand Credit Cards from Discover, not a plethora of banks and other financial institutions.
So you can pretty much go to Discovercard.com and AmericanExpress.com and look at all their offerings and compare their cards features, rates and terms side by side. But to compare Visa’s and MasterCards you need to make a spread sheet and include where the Visa or MasterCard is coming from. There are online card comparisons that you can utilize for this. Do a search on the internet for credit card comparisons and see what you come up with.
Just a hint, these comparisons usually don’t include your local banks or credit unions. So don’t forget to go to their websites or call them for the information to compare services.
With all the new rules and regulations, it might pay you to compare any credit cards you already have to what is available now. And keep up. Do a comparison once a year to make sure you are still getting the best deal, best service and have the credit cards that work for you.
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