Like any topic in life, there are so many questions that go unanswered. When you finally get the answers, it helps better understand the situation. To help better understand students and credit cards, we have compiled a list of a few of the top questions student's have asked and put answers to them to help better your understanding.
What is the APR Rate?
The APR rate is known as the ?annual percentage rate?. To put it in very simple terms, this is the rate you're going to pay on unpaid balances. Let's say for the month of March, you have a $500 bill and you pay off $300. This will leave you with $200. Now, let's say your APR rate is 20%. You will apply 20% to that $200 that you didn't pay. If you didn't buy anything for the whole next month, your bill total will be $240.
This is why it's important to pay off your bill in time. If you fail to pay off your bill in full each month, the finance charges will hit you hard. This of course, is how the credit card companies stay in business. They rely on people like you.
What is the annual fee?
An annual fee is like a membership fee. You're going to pay this fee yearly regardless of how much you use your credit card. If you use once or a million times, this rate will never change. With an annual fee, you will find that most platinum or cards with a lot perks will have this fee. A majority of the credit cards you do apply for though will not have this. Just make sure that when you apply, you look at the terms and see if the fee exists.
How do I know what to apply for?
When you're applying for your first credit card, it's important that you note a few questions. You'll want to ask yourself, ?What kind of credit card rewards do I want??, ?How often will I use this??, and ?What company do I want to through?? Once you answer all of these questions, you will have a better understanding of what credit card will fit your needs.
You may think that visa and MasterCard are both very similar. This is known to be very untrue. You will see that each card company offer different rates and rewards. The customer service also varies. Make sure that you look around online to see the reviews that people have left for particular companies.
As for the rewards, you will want to look at all of the different rewards you can apply for. Rewards range from gasoline to shopping rewards. All the systems are very similar in where you'll get points for every dollar you spend. Once you receive the points, you'll be able to cash in on your rewards.
In the end, these are some of the top three questions that students ask when they are applying for their first credit card. It's important that you do your research and the best place to do this usually is online. Try to avoid signing up for a free t-shirt or by a mailer. There are so many choices out there and it's your choice to apply. Be responsible and smart and you'll do just fine with a credit card.
Before choosing a credit card you need to decide what it is you need a credit card for. Will you use it more for impulse buying or is it to be kept for emergencies only? You should also make an honest assessment of your current financial responsibility level so you know if you can handle accounts, budgets and money matter responsibly.
Different student credit cards offer different categories of benefits that are designed to suit various purposes. Make sure you choose the student credit card that is most beneficial to you depending on your spending requirements. If you have a car, a driver's card that offers rebates or points for money spent on car repairs or gas would be very useful.
If your major expenditure is on music, you should opt for an entertainment card that offers points for purchasing CD's, DVD's or even for buying movie or concert tickets. Other cards offer air miles that can be used against hotel stay or booking flight tickets. Selecting a card depending on what your biggest expenditures are gives you the most savings by way of free stuff that is given away such as free tickets, trips, movies and even free Disneyworld tickets and the like.
Equally important is to read and fully understand all the credit card terms carefully. If there is a high possibility that you will carry forward a balance from one month to the next, it is important to look for low interest rates. Teaser rates can be deceptive; what you need to check is what it will increase to when the introductory period is over. Besides comparing interest rates of various credit cards, check out how the interest rates would be affected by late payments. Also look into any associated fees that may be involved.
Weigh the pros and cons of buying a credit card that charges any kind of annual fee versus another that does not require any annual fee to be paid. If you intend to avail of the special incentives offered, such as frequent flier miles or hotel stays, then an annual fee may be worth paying. But make sure that the incentive is worth the annual fee that is being charged.
Both Tom Tessin & Adrian Adams are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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