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What Every Graduate Should Know About Credit Cards

creditcardsFor the majority of graduates, college tends to be an amalgam of learning and personal discovery, however, there are some things that a graduate will discover cannot be learned from a book : money management.

Credit Cards for Students

For the most part, students will live alone or with a roommate, but some will live at home in order to save money. No matter where they live most students will need some money to purchase books and equipment. One of the easiest ways for a student to borrow money is by applying for a credit card; however, credit cards can lead to debt and other financial difficulties if they are not managed properly. Suzanne Boas of credit counseling group CredAbility says, “Every year, our credit counselors see young adults whose credit card bills got out of hand shortly after leaving home for college or a job. Many were charging without a plan on how to pay off their purchases.”

On the flip side, student credit cards can be handy for emergencies, and it is advisable to have one in case something needs to be paid for at short notice. There are a number of credit cards that are being targeted at students by  banks and financial institutions, and it can be quite confusing for a lot of students who are new to the credit card market.

Avoid Unnecessary Fees

One of the most important aspects of any credit card is be able to find one that does not charge an annual fee or a fee when you sign up. For the most part, credit card companies that charge an annual fee or sign up charge will try and tempt you with a gratuity such as free cinema tickets or similar; however, do not fall for this offer as this is just a ploy to get you to sign up and thus fall into the fee trap.

Get Something in Return

A lot of cards offer cash-back bonuses,  this works by giving you a percentage of your total spend back at the end of the month. The amount you receive depends on how much you spend, and is one way a credit card company will lure you into using your card on a regular basis. This is a good offer, so long as you are in a position to pay off the balance, in full, in order to avoid interest payments.

Aim to Find the Best Interest Rate That you can

One of the most important aspects to any credit card application is to make sure you are signing up for a credit card that has a low interest rate. The lower the interest rate, the more money you can save on annual interest payments, although, this does depend on how much money you owe on the card, and it’s always advisable to spend only what you can pay off at the end of the month. The interest rate is important, as is cash-back, but try to opt for one that has the lowest interest rate possible, regardless of cash back offers. In the long term a lower interest rate will save you more money. Interest rates on student cards are around 30% APR, but they do vary so it is best to shop around.

Over all, avoid cards that want to charge you an annual fee or fee to sign-up. Try to get a card that gives you cash back, but not if you can find one that has a very low interest rate, resulting in a better bang for your buck. Try to pay off the outstanding balance at the end of the month in order to avoid paying interest on your purchases.

About the Author:

Today’s guest article comes from +Chris Mettler , a personal finance blogger.  His blog is where he shares his insights about credit cards and personal finance tips.


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