How should you choose a student credit card?

Choosing a Student Credit Card

If your student credit card uses different rates for purchases, transfers, and cash advances, realize that the credit card company may pay the lower interest rate balance first. Consequently, if you carry a balance, your high-rate cash advance may not be "paid" until all lower-rate balances are paid in full. Fixed-rate student credit cards are not fixed forever. Rates can be changed at any time, as long as the card issuer provides 15 days advance notice of the change in terms. Fees may also increase. These "Change in Terms" notices are usually included with your monthly statement. Your interest rate may dramatically increase if you make late payments. For example, some issuers will raise your interest rate to the maximum after one or two late payments. Consequently, your 12% student credit card could quickly turn into a 25% credit card. Your credit card issuer may also raise your interest rate after conducting a routine credit report review. If your overall credit history has deteriorated, the issuer may raise your interest rate, even though you've never made a late payment on the card in question. The 25-day grace period only applies when you pay-off your entire balance due each month. If you only pay the minimum payment, interest is immediately accrued from the moment you charge something to your credit card. Some companies are also shortening the grace period to 20 days, and some student cards have no grace periods. Ignore offers to reduce or skip payments. These options are frequently offered over the holidays. When you skip a payment, the loan continues to accrue interest; therefore, these offers simply increase the overall interest and finance charges that the creditor collects. On a similar note, beware of offers of no payment/no interest for a period of time. Furniture stores, jewelry stores, and electronics stores frequently offer these programs. For example, "no payment/no interest for 12 months!" This can be a good offer, but once again, read the fine print. Make sure you know the details of the program. Generally, you need to pay off the entire balance before the end of the "free" period to receive the benefit. Otherwise, you will probably have to pay interest on the entire balance from the date of your purchase.

Here are more opinions and answers from other FAQ Farmers:

• Note that the Citibank Student Card is one of the most popular and longest running student credit cards. It's the one I had in school.

• I would not sign up for any Citibank card. Having done business with Citibank before I'd like to warn everyone that the company makes lots of mistakes and has ineffective internal controls. I actually had to threaten to call my lawyer to get a few things done, my case ended up on an EVP's desk who finally straightened everything out and apologized with a Mea Culpa in writing. Discover card is the way to go, I've never had a problem with them and their customer service is amazing. Good luck!

• What is the best website to apply for a unsecured credit card?
• How can you pay one credit card with another and are there websites to help?
• Short words ending with a?