Though credit cards have been around for at least sixty years, it’s difficult to believe that not too long ago a student could go away to college and not need a credit card. The Internet, which has only been around since the mid-1990s, and particularly the ability to toss just about anything into an online shopping cart, has made having a credit card necessary for nearly anyone over 18 years old (the legal minimum age for a credit card user).
Credit card companies such as Visa and MasterCard want your business, BADLY. These companies make money in a couple ways. One is that the vendor, or store, pays approximately 3% for every credit card transaction; for example, you use your MasterCard to purchase a $100 digital camera at Circuit City, they receive only $97 of that, Master Card gets the remaining $3. Also, interest, finance charges and late fees can be very lucrative for credit card companies.
You may be excited when a letter addressed with your name offers you a credit card, but don’t be too flattered; thousands of college students are receiving this mass mailing at the same time as you. Be sure to destroy any credit card or even credit card application that you don’t want—cut the unwanted card or application into teeny tiny pieces.
It may be to your advantage to have only one credit card. This keeps your life simple and, hopefully, deters you from overspending. So, shop carefully for that one credit card. Ideally, you will be a super responsible spender and only charge what you can afford so that you can pay your full balance each month and never pay any extra fees. But, be honest with yourself. If you don’t think this will happen, then you definitely want to select a credit card with a low interest rate. Take your time researching the card that appears to have the best rate.
The Internet is a good place to find tools that help you sort out which is the best type of credit card specifically for you. Some cards are designed especially for students and help you to establish a credit history. Your credit history follows you through life and hopefully shows that you are a responsible borrower—a good credit risk. Often you will find specials, such as a card that charges no interest for the first six months, but be careful—often cards that start out at a 0% interest rate jump to really high interest rates eventually. Some cards may give instant approval; others have a reasonably short waiting period until you receive your card and can start using it.
If you fly often, for business or for fun, you may do well to choose a credit card which gives you miles on a specific airline for each dollar you charge on their card. Some of these cards are tied in with a frequent flier program. Credit cards from gas stations are great of you fill up frequently with gas. Many retail and online stores also offer these specialized credit cards. You may need to get out a calculator and play with the variables to see of any of these credit cares is right for you.
Other credit cards give you reward points for every dollar you charge on their card. After you have accumulated a certain number of points, you can use the points to buy certain items or services. Be sure to read the fine print to determine if this type of card will really benefit you.
Some credit cards offer a cash rebate. Some offer as much as 5% for specific items from specific stores on specific dates. That may be more trouble than it’s worth unless you are a prudent record keeper. Others offer 2% on food, gas station, convenience store, utilities, and pharmacy, with a 1% discount on all other purchases.
With so much identity theft nowadays it is a good idea to use a separate credit card number for purchases made online. The laws for online credit card purchases are a bit different than charges made at the brick-and-mortar stores. If you do only have just one credit card, you may want to choose a card that offers a temporary credit card number for each online purchase to minimize the damage in case your credit card number is tampered with. Call your credit card’s toll free number to find out more about this.
When choosing a credit card, don’t be in a hurry. Figure out what you need and shop around online until you find a card that suits your individual needs. Read the fine print and be careful, no matter what kind of credit card you have if you spend more then you can pay you are going to have problems. So spend responsibly and your credit card will serve you well for many years.