Credit cards can carry negative connotations – people often think about credit card debt, overspending, and the risks associated with using a credit card. However, the reality is credit cards are beneficial when used correctly and responsibly. Credit cards allow individuals to build “credit” which is needed later in life to obtain important loans for buying cars and housing. When paid off on time and in full, credit card users build good credit scores and avoid falling into credit card debt. Introducing college students to credit cards responsibly sets them up to begin building credit and working toward their own financial goals. In this article, we discuss the best features of credit cards to get for students who are starting to build credit.
Best Features to look for in College Credit Cards:
- No or low fees: A traditional student budget is tight so paying a monthly fee to establish credit is counterproductive. Look for a credit builder credit card with no annual fee, if the credit card you’re looking at has an annual fee move on, you’re likely paying upfront for rewards and perks you will not use as a student. Also, keep an eye on other fees that add up over time such as over-limit fees, foreign transaction fees, cash advance fees and card reissuance fees. Avoiding high credit card fees is a good way to keep money in your pocket. All of Eagle’s MasterCard® credit cards feature no annual fee along with other no and low fee options perfect for a student budget.
- Low interest/Low APR* (Annual Percentage Rate): When it comes to getting that first credit card, students often focus on getting an approval for a card instead of finding the right card for their needs. The important thing to keep in mind is the interest rate. Be careful of cards offering a low teaser interest rate designed to get you to apply. Teaser rates, also known as introductory rates, are good for a short time. Once the promotional period ends, that low teaser rate adjusts up to the standard qualified rate which typically upsets a student budget with interest charges. To help students, consider looking at Eagle Community Credit Union’s Credit Builder MasterCard®, the rate is fixed at 13.9% APR* with no annual fee. With Eagle’s low fixed rate, students building credit can better budget paying their credit card bill in time and avoiding high interest rates and fees.
- Limited Credit: For students who are just starting out with their first credit card, it might be a good idea to consider limited credit. Certain credit cards have a credit limit that is appropriate for student spending. In other words, students do not need a high credit card limit because it gives them more of an opportunity to misuse the credit limit and fall into the risks associated with late payments and credit card debt. Looking for an appropriate credit limit allows your student to build credit while refraining from going overboard on discretionary purchases.
- Secured Card: Secured credit cards differ from regular credit cards because they require a security deposit. Due to this, applicants are able to be approved more easily since there is already a security deposit attached. These cards are a great way to build credit responsibly. They can also help someone rebuild credit if they have had a poor credit score in the past.
- Rewards: Eagle’s Rewards MasterCard® is perfect for students away from home or simply desiring to travel often but are on a “college budget”. Rewards points are earned by making everyday purchases allowing the user to build useable points to apply towards flights, gift cards and merchandise. This means that any purchase can eventually build points towards a night out, a needed dorm room item, a flight home for the holidays or a spring break trip!
It is important for college students to understand the responsibilities of being financially independent and building a good credit score for their own future. This is why finding the right student credit card can be a great starting point to introduce your child to adult responsibilities and the benefits of building credit. Not only are credit cards a great tool to teach young adults how to manage their spending and finances, but they also offer great rewards and incentives! Before your young adult heads off to “the real world” at the end of summer, research the best Eagle credit card for their student needs at www.eaglecu.org/CreditCards.
Want to learn more about credit cards and building credit? Check out Eagle’s online financial literacy site.
*APR = Annual Percentage Rate, your APR is determined by your credit qualifications. Based on approved credit and qualification.
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