by Moe Zilla

Created on: July 21, 2010

There's a few student credit cards offering a 0% rate - but there's some important details that you have to understand. A 0% is almost always an introductory rate, and after a few months it's replaced by a much higher interest rate. Make sure you can pay off your balance at the end of each month, or you'll end up paying a lot more than the cost of your original purchase. You're much better off with a student "living expenses" loan, which usually has a much lower annual interest rate, and can sometimes even be deferred until after you've graduated.

Many credit card companies tell you that by signing up for a card, you're helping to establish your credit history. This is true - but that's only a good thing if you're actually making your payments on time. Otherwise, you're actually hurting your credit history, and for the rest of you're life there'll be a record of the financial mistakes you made when you were 18. A friend of mine got some great advice from his father in college. "Sign up for a credit card - but then put it in your drawer and never use it." This establishes a perfect credit history - of never missing a payment, and never falling behind on bills. After graduation, my friend ended up with a great credit rating, and he was able to finance both a new car and the furniture for his new apartment - all at a very low interest rate!

You don't have to understand student credit offers by yourself. Every college in America will have a "financial aid" office whose counselors will be glad to answer your questions. First, you'll want to make sure you've maximized all the free grants which are available. (Sometimes they'll find student aid programs that you didn't even know about.) I remember a woman in college who qualified for a special scholarship for non-traditional students which is basically the best form of credit ever: she didn't have to pay it back!

The government also offers student loans at an extremely favorable interest rate. There's usually repayment plans that can be deferred until you graduate, and you'll get a much better interest rate than with a non-government credit offer. When I was in college, there was always someone who claimed to have heard a story second-hand about a student who took the low-interest government loan, and then invested it at a higher rate of interest someplace else. They used the interest from their investment to pay the lower interest on the government's student loan - and ended up making a profit!

Learn more about this author, Moe Zilla.
Click here to send this author comments or questions.