Bring that Magnifying Glass!
By: Larry Goldberg
If you’re about to apply for a new student credit card, one of the most important things you can do before you apply is to read the fine print. That fine print will not only help you understand your statement a bit better, it will keep you from being surprised when you get slapped with an extra charge or two for taking out a cash advance for that midnight pizza run, making a late payment, or going over your credit limit.
Know Your APR
Before you sign any credit card application, you need to be aware of the card’s APR. APR stands for “Annual Percentage Rate,” and it’s the amount you’ll pay in addition to the total cost of the purchases you make. The problem with advertised APRs, though, is that the student credit card companies only advertise them to make you sign up for the card. In most cases, not only will the advertised APR expire, but most companies also reserve the right to change your APR at any point in time as long as they notify you of the change. So, while you may think you’re getting a great APR on that new student credit card, it may not be as great as you initially believed.
Understand How Payments Work
You send in your bill each month, but do you really know how the payments work on the card? If not, that’s certainly something you need to find in the fine print of your new student credit card. Payment aren’t all equal, and if you intend to use your card for cash advances, balance transfers, and purchases, knowing what will get paid off when is important information. In general, purchases have to be paid off before a dime is applied to a balance transfer or cash advance, but that can very from company to company. Be sure to look before you leap.
Fees, Fees, Fees
The credit card industry is built on collecting money from various kinds of fees, and catching what you’ll be paying when is very important. One of the first things you should look at in the fine print is how much the cash advance fee is going to be. If you’re like most college students, cash is scarce but often necessary and understanding how much that cash will cost is pretty important. You should also look about your over limit fee. If for some reason you go as much as a dollar over your credit limit, the company will slap a few extra fees on your account. Don’t forget to check into the late payment fee while you’re at it.
Part of knowing what you’ll be paying is understanding how your billing cycle works, and for some companies, they billing cycle is quite a brain workout. In fact, if your card company uses a double billing cycle, the amount that takes to pay the card off may vary from day to day, as you could be charged interest on the amount even after you’ve paid it off.
Credit cards are easily one of the most important parts of campus life, but understanding the terms before you sign up for one is an essential step.
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