Credit Card Fees College Students Must Know About

So you’re walking around campus looking for something to do when you see a stand offering credit cards for college students. Not only do you get a credit card but it might even come with a free frisbee or a free t shirt or a logo of your college on the credit card.

Kind of funny how the credit card company employees are quick to help you fill out the credit card application and quick to send you over your very own first credit card. Before you become an adult and start using your brand new credit card, take a few minutes to consider some of the many credit card fees that could lead to long term credit card debt:

Credit card costs that you might not think off right away:

Maxing out your credit card. You buy lunch with your credit card today, tomorrow you do some online shopping, next week you bring it to the bar and next thing you know your credit card is maxed out. Now you have to find a way to pay off your maxed out credit card or the interest will start piling up and following you well into your mid to late 20s.

Screwing over your cosigner. With the new Credit Card Act of 2009 it’s going to be more difficult for college students under 21 to actually obtain a credit card- a cosigner will likely be needed. If you find someone (parent, relative, older sibling) that’s willing to cosign for you then you should be extremely grateful. God forbid something should happen (maxing out credit card, not making the payments, etc.) because you will then affect the credit rating of the person that cosigned the credit card for you. Screwing over an older relative or brother like that you’re probably better off going into protective custody.

Messing up your credit rating. You miss a credit card payment here and there, no big deal- until you see that your credit rating is in the toilet. Yesterday I outlined the importance of a credit rating so all I will say today is don’t let your college years screw up your chances of getting a mortgage one day.

Common credit card fees to watch out for:

Cash advance. The very popular college credit card, the Discover Student Credit Card charges a fee of 3% of the cash advance amount.  Sure 3% sounds very tiny but you really don’t want the power of interest against you. The reason the credit card company is so quick to provide you with the cash is because they’re charging you money just to pull it out, so be careful!

Higher interest rates. As a college student the credit card provider may view you as a greater risk which results in a higher interest rate. You can argue that the logic is a bunch of bull but that’s the way life works. Many college students are very responsible (which results in them reading Studenomics, cheap plug) and should not be viewed as a “risk” or “irresponsible” but that’s simply not how the credit card companies feel.

Interest payments. There’s going to be that month where you come up short a few dollars and only make the minimum payment on your balance. Guess what? The minimum payment does not mean you are in the clear. It just means that you made the smallest payment that is acceptable from you, no need to pat yourself on the back yet.

Not exactly a groundbreaking article but sometimes it’s important to discuss the basics about credit cards for college students. It’s no secret that credit card debt and college students go hand in hand, however, if you are taking the initiative to read Studenomics among many other personal finance blogs then you will educate yourself and hopefully educate those around you about credit card debt.

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