What Should Students Look for in a Credit Card

Most students looking for a credit card are choosing their very first credit card. Without any experience in credit, it’s hard to know exactly what to look for in a credit card. The “squeaky wheel” of credit cards is often the one that gets picked. That’s the one that’s posted somewhere on or near campus or the one that’s offering something free in exchange for a credit card application. Credit card issuers find ways to get around Federal laws that keep them from luring college students, so it’s important that the student how what to look for.

Look Beyond the Name

Often, credit cards that are marketed to students are some of the worst credit cards on the market, which the word student added to the credit card name. Just because a credit card says it’s a student credit card doesn’t mean it’s a good credit card for students. Rather, it means that’s the card the credit card issuer wants students to have. Some of the best credit cards for a student first-timer may not even have credit in the name.

A Low Interest Rate

Student credit card or not, a low interest rate is always a good thing. Not that you plan to carry a credit card balance, but if you ever let your credit card balance “revolve,” you want to pay as little interest as possible on the balance. Average credit card rates are in the mid-14% so look for an interest rate around or below that. If you’re a student just starting out with no negative information on your credit report, there’s no reason your interest rate should be high.

A Low Credit Limit

You learn to ride a bike with training wheels before you learn to ride one that doesn’t have training wheels. Having a high credit limit is glamorous to a young adult because it means you can charge a lot. That’s the same reason that having a high credit limit is so dangerous. A small credit limit helps you get used to managing credit without the risk of going into a lot of debt. If you mess up, it’s easier to get help paying back a $500 credit card balance than a $10,000 balance.

No Annual or Monthly Fees

Credit cards without any frills, extra benefits, or rewards don’t need to have an annual fee. There are plenty of credit cards out there – both student and non-student – that don’t have annual fees. Just because a credit card has an annual fee doesn’t necessarily mean it’s a bad credit card, but a student just starting out doesn’t need an annual fee on his first credit card.

Introductory Interest Rate on Purchases

An introductory rate isn’t a requirement, but it’s a nice to have. The introductory rate lets you pay a lower amount of interest in the first few months of having your credit card. Be careful, though, because when the introductory rate expires, your balance will be subject to the newer, higher interest rate.