What to Know About Student Credit Agreements

Students are often offered credit—student credit cards, overdrafts, or small loans—with tempting terms (low or no interest for a while, sign-up perks). If you don't read carefully, you might agree to high rates after the promotional period, fees that add up, or repayment terms that are hard to meet. Here's what to check in student credit agreements before you sign.

Interest and fees

• Promotional rate. Many student products offer 0% or low interest for a limited time (e.g. first year). What happens after? The rate may jump—so know the go-to rate and when it applies. If you don't pay off the balance before the promo ends, you could owe a lot in interest.
• Fees. Annual fee? Late payment fee? Over-limit fee? Foreign transaction fee? Fees can add up—especially if you're on a tight budget. Read the fee schedule and factor it into your decision.
• APR. The annual percentage rate (APR) shows the cost of credit including interest and some fees. Compare APRs when you're choosing—and make sure you see the rate that applies after any promo.

Repayment

• Minimum payment. What's the minimum you must pay each month? Paying only the minimum can mean you stay in debt for years and pay much more in interest. Try to pay more when you can.
• When is payment due? Missing the due date can mean late fees and a hit to your credit score. Set reminders—or set up automatic payments if the lender offers it.
• What if you can't pay? Does the agreement say what happens if you miss payments—default, collection, impact on your credit? Know the consequences. If you're struggling, contact the lender early; some offer hardship programmes or payment plans.

Other terms

• Credit limit. What's your limit? Going over can mean fees or the card being declined. Stay within your limit and budget.
• Grace period. Is there a grace period before interest is charged on purchases? That can help if you pay in full each month—but only if you do pay in full.
• Co-signers. If a parent or other person co-signs, they're on the hook if you don't pay. Make sure they understand—and that you're committed to repaying so they're not liable.

BeforeYouSign can highlight interest, fees, repayment, and other key terms in student credit agreements so you know what you're agreeing to—before you sign.