Tips for Choosing the Right Credit Card for Your College Student

Choosing the right credit card for your college student is both challenging and exciting. As a parent, you need to assist your child in understanding the fundamentals of credit accounts. Before a young adult enters the campus, plastic offers may already be pouring in. Your guidance is required so that your teen can select his or her first card wisely.

The ultimate goal for choosing the perfect credit card for your college student is to establish positive credit history as early as possible. Here are the important things to examine so that you can achieve that goal:

Annual Percentage Rate

Also known as the APR, this is the amount of interest where the card holder will be charged every month based on the remaining balance of the account. Credit cards today have an average APR of 14.9%. Since your child is practically a novice when it comes to this, expect that the APR is higher than the mentioned percentage.

Help your young adult understand that the APR is the easiest way to accumulate debt. If they carry a balance of $100 for one month, he or she will have to pay an interest of $14.90 on top of the balance. It is smart to find a low APR credit card for college students.

Credit Limit

This denotes the maximum amount of credit that a student can borrow. First-time card holders are usually given a low limit to begin with—usually around $300 to $500. While this is quite a small amount, it will be easier for him or her to defy the appeal of spending thousands of dollars.

Rewards

A credit card for college students that offers rewards gives an additional advantage. Some cards give back cash after spending enough credits. Others can be redeemed for gift certificates and merchandise. Ensure though that you discuss with your teen about the dangers of spending more just to get the rewards. Teach him or her to be strategic in using the card to avoid debt.

Fees

As much as possible, go for a college card that does not have an annual fee. Most cards, however, require late payment and over-the-limit fees. It is significant that your child understands the fee structure thoroughly.

Credit Card Options

Although the Credit Card Act of 2009 imposed a few restrictions on student cards, there are still a number of options for your teen including:

• Co-signed Credit Cards – Students that are below 21 years old can have a co-signer to get a credit card. Note that when the student cannot pay, the co-signer will be responsible for all the bills.
• Secured Credit Card – A deposit is required to start using the account. This is a good choice for beginners and is usually easier to obtain than standard cards. Plus, this can be used to build credit history since all activities will be reported to credit agencies.

The bottom line in choosing the right credit card for your college student is to be very cautious. Parents’ supervision is required so that students will understand that this positive tool can turn into a vicious financial instrument when used improperly.