The rates are typically variable, meaning they can change within specified limits based on an underlying market rate, such as the London Interbank Offered Rate (LIBOR). As you evaluate student credit card interest rates, you’ll likely be comparing APRs, which are percentages representing the cost of interest charges and fees for borrowers. Interest calculations can seem fairly confusing, but they’re essential to understand before signing up for any card. But before committing to any card, be sure to understand your interest rate obligations for the long haul.
This isn’t necessarily negative in fact, it can be a valuable perk for the first few months.
For example, some cards offer a low introductory APR but adjust to a higher variable interest rate after the initial period. When evaluating credit card interest rates, though, it’s important to consider how they may vary over time. That makes them an appealing option for current students and others hoping to build their credit over time. However, in many cases, student credit cards offer surprisingly good interest rates to borrowers without strong credit. With a typical credit card, interest rates are based on the borrower’s credit history: If someone has excellent credit, they’ll typically get a better annual percentage rate (APR) than another borrower with a lower credit score.Īs a result, borrowers with bad credit or limited credit histories often get relatively high interest rates, which translate to higher borrowing costs over time. Many also have intro bonuses: If you spend a certain amount on the card within your first few months, you’ll get a nice chunk of cash as a reward. Others offer cash rewards for maintaining a high grade point average (GPA). Student cards often tailor rewards categories to everyday purchases for college students, such as streaming services, gas stations, grocery stores, and restaurants. Typically, you can apply cash back and points to your balance as a statement credit. Frequently, bonus points are awarded for spending in specific categories. Others use a “points” reward structure, allowing you to apply the points you earn to make purchases. Some cards offer cash back, meaning a small percentage of what you spend on your card ends up back in your wallet. Student credit cards are no exception, and their rewards programs are usually designed to appeal to college students in particular.Įach student credit card offers its own reward structure, so it’s important to compare these benefits when choosing which one you want. Rewards credit cards offer financial advantages and other perks to attract borrowers and encourage spending. Many landlords and employers also check credit reports to assess whether you’re responsible, so a strong score can also help open other doors. A good credit score will increase your chances of getting approved for other kinds of loans and lead lenders to offer you better interest rates.Īccordingly, building your credit while in school can help you save money in the coming years, allowing you to pay less in interest charges on a range of major purchases.
If you prove you’re a responsible borrower, you can expect your score to incrementally improve. A student credit card allows you to build a solid credit history, demonstrating you can borrow responsibly and repay in a consistent and timely manner.Īs you use and pay off your student credit card, your activity will be reported to major credit bureaus, who use this information to calculate your credit score. Many of life’s most crucial investments and decisions revolve around your credit: From auto loans to mortgages, the major purchases in your future will be influenced by your credit report.
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