Accounting and Finance Foundations

Unit 10

Accounting and Finance Foundations Unit 10: Credit 762

Credit

Chapter 22

Student Guide

Lesson 22.5 Credit Cards—Choosing the Right One (cont’d)

As you can see, there are many possibilities in credit cards today. Choose carefully, and use your card

responsibly to avoid heavy interest charges that can both cost you a lot and damage your credit rating if

you are unable to keep up with payments.

Even if you don’t plan on using a credit card right away, it is still a good idea to apply for one while you

have the advantage of student pre-approval. If you wait until after finishing school, you may not qualify

and will have missed the chance to start building a credit history earlier. Remember, even if you receive a

credit card, you do not have to use it. As long as there is no annual fee, it will not cost you anything and

may come in useful in case of an emergency. Just remember to use your card responsibly, protect it from

getting lost or stolen, and beware of interest rates and hidden costs.

Exercise

Go online and compare the student credit cards available from different banks. Also, do a quick comparison

of the interest rates associated with each, along with those of standard low-interest cards. Be sure to read

the fine print of the offers. What bonus programs are the most appealing to you? Remember to make sure

there is no annual fee associated with the card.

Next, do a little math. If you pay your credit card off each month, it does not cost you anything. If you carry

a balance, the costs can be considerable. If you put $1,000 on your card for school expenses and pay it

off over the next four months, how much would you end up paying on the different cards? Remember to

factor in any interest-free periods.