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Discover Card might be viewed by some as the little brother of the major credit card providers. Visa is everywhere you want to be (at least that’s what they used to say), MasterCard is for everything that’s not priceless, and Discover…well, I’m not even sure. They’re trying though. I have to give them that.
As Discover tries to build its brand and compete with the heavy hitters of the credit world, it looks to tap into a potentially huge and lucrative market – college students. Tens of millions of kids go to college every year. We’re talking about tomorrow’s earners, and consequently tomorrow’s big spenders.
They’re watching mom and dad sink deeper into credit card debt every year, and as the saying goes, the apple generally heads down the same path as the tree and racks up a bunch of debt on the way. Or something like that.
Anyway, Discover knows that if they can get you on board while you’re in school you’re likely to stick with them for a long time. My parents have had a Discover card for over 20 years. I think they might have the first one.
In order to impress you Discover has put together a ‘Credit 101′ course on their website designed to educate and persuade you – to open a Discover Card Student Credit Card. They put great questions on there such as: What is a credit card? and What is a credit report? and How can you build your credit history?
The quiz is multiple choice, but they’re not actually trying to insult your intelligence. I guess the thought process is if they can educate you and keep you on their website you’ll probably fill out an application. Of course they’re hoping you’ll get approved, run up a balance, and make minimum payments for the rest of your life.
But you are way too smart for that. If you open one of these cards you’re going to use it to build credit score and credit history while making your monthly payments on time and never paying interest. Good for you.
- Here are a few of the benefits of the card:
- Six months introductory APR of 0%.
- They won’t make you pay an annual fee.
- You can get 1% to 5% cash back, depending on the type of purchase you’re making.
Along with those they give you the standards for most student credit cards – online account management, email bill reminders, etc. It looks like Discover will take good care of you if you pick up their student credit card.
Credit Cards are a commodity product. What does that mean? Commodities are products that are really only differentiated by the price and terms of the purchase. A mortgage is a commodity product, as are homes, cars, cell phones – you get the idea.
Why do I bring up commodities? Because when you’re going to compare student credit cards you have to understand there probably won’t be much difference between them when it comes to rates, fees, etc. You’ll want to dig a little deeper for the intangible benefits offered by the different card providers.
Let me give you an example:
I read a review from a young man in the UK that had applied for a graduate student credit card with Barclay. He wasn’t happy at all. He had three main complaints: 1. They asked for a letter proving his status as a graduate student, then didn’t accept the letter he sent them. 2. Their customer service center was located in India, which on its own might not have been a huge problem, but the agent he spoke with seemed to give him a lot of attitude and spoke with such heavy accent that they couldn’t even understand each other. 3. They finally approved him for the card, but only gave him a limit of about $500. His feelings? “What’s the point?
Near the end of the review he also complained about the high interest rate. Lastly he mentioned having transferred all balances to a Virgin credit card.
What’s the lesson? I’m guessing this guy initially liked the idea of opening a student credit card with a notable company, looking to build his credit score and his credit history. What he got was a lot of hassle and he ended up with a credit card he didn’t even use in the long run.
I strongly recommend reading some reviews online of the customer service a credit card company offers. Just because you’re a college student looking for an opportunity to improve your status as a credit holder doesn’t mean you have to settle for mistreatment by the company you’re generating a bunch of revenue for. Find a card that treats you well. I’ve had great experiences with Bank of America’s customer service.
Compare Rates for Student Credit Cards
So let’s say you’ve found a couple of companies offering student credit cards that have great online reviews for how they treat their clients. At this point it comes down to price and limits. That means getting down to the cold hard numbers – what interest rates are they offering on balance transfers and purchases? How big of a credit limit will they give you? Do they charge application fees or an annual fee?
Once you know they’re going to treat you right, and you know the numbers make sense, go for it.
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Well there are many former students out there that have finished college and are trying to establish a career, but they have years of bills to pay. This is a big hassle because potentially you can have bad credit, especially if you have missed payments on your student loans. Obviously there are a lot of things that go into what your credit score is and a student loan can have an impact on that. If you miss a payment then you are going to get hit on your score. It will take a good six months of on time payments to bring your credit up or to even be considered. So don’t miss any more payments if you have.
Student loans usually have lower interest rates then credit cards, so I would probably stick to using that loan for expenditures before going after a credit card to use. On average interest rates for student loans are around 5%, but a credit card can have an interest rate around 15% and if you have bad credit or little credit history then it could be up to or over 20%. This can be silly for you to take on if you don’t know how to use it correctly. So first before getting a credit card, consider your spending habits and how you can improve it.
Students With Bad Credit And Loans, Looking For Cards And Checking Accounts
If you do decide to get a credit card then the first thing that you should probably do is set up a checking account and a savings account. Look at some store credit cards as options to get your credit going, just don’t spend like a 13 year old girl before her first day of school. Use it sparingly and pay off all debt quickly. The next step would be to get a secured credit card that will require a deposit and probably an annual fee (not always). There will be high interest rates, but the same rules apply for this as with the store credit cards. Use this simply as an experiment to improve your credit. You would be amazed how many people go nuts and think this is actually their money. I deal with this everyday and it boggles my mind.
This will take a few months and continue to pay off your student loan. If you have to, look at using the student loan to pay off any credit card debt as a last option. This can be intelligent if you are in a bind because the rates for the credit card will be higher and you want to always pay off higher interest rates first. In the end if you are a student with bad credit and student loans, finding credit cards and checking accounts can be very beneficial if you decide to use your dollar bills wisely.
