Dear Alpha Consumer,
I'm a college student. Should I get a credit card? Which one should I get? If I'll be able to pay off the card every month, does it matter what the interest rate is? Help!
Despite all the criticism about college students and credit, now is a good time to get your first card and start building your credit history, as long as you can be sure to pay off the card each month. Graduating with thousands of dollars of debt is a bad idea, especially when you're also paying off student loans and trying to make ends meet on an entry-level salary.
Since you say you will pay off the card each month, the interest rate will not be that important to you, although it's always a good idea to find a card with as low a rate as possible, just in case something unexpected happens and you end up racking up a bill you can't pay off right away. Sites such as IndexCreditCards.com and CardRatings.com can help you compare and find the lowest rate. You also want to make sure to find a card with no annual fee.
The next point to consider is whether you want to earn rewards. Rewards cards generally carry higher interest rates, so this is something to think about only if you are confident you won't carry a balance. But if you fall into the 40 percent of consumers who pay off their cards each month, then you might as well get rewarded for that. To keep things simple, you could look for a card with cash-back rewards (such as the Discover Student Card) or ask your bank what kind of rewards cards it offers.
That way, you'll be building your credit history, getting in the habit of paying off your bills each month, and earning a small chunk of change or free gift at the same time.