Before you apply for that Discover Student Card, there are a few things you should know. In 2010, the U.S. government banned all banks and credit card companies from going onto campus and advertise their financial products. In fact, the U.S. government passed a law forbid companies like Discover and Capital One to be within 1,000 feet of any university campus?
The bottom line is Discover Card and Capital One’s high Interests and fees. These companies found a way to pray on our university students and entice them with t-shirts and pizzas to sign up for credit cards that the students can’t afford to pay back. On top of that, these credit card companies charges students over 24% plus compounding interests. If you are ever late on your payment, there is a $35 to $37 late fee. Capital One made millions off of the backs of students and that was the reason why the U.S. government passed a law called The Credit Card Responsibility Act. Fast forward a few years, these products with very similar terms are creeping back into the public eyes.
Facts & Fine Print
Let’s get to the chase. Discover charges students 13.74% – 22.74% APR (annual percentage rate). If you own $500 dollars to discover on their credit card, it will take you over 2 years and $135 interest to pay off your debt. If you are ever late on your payment, you have to fork over $37 and if one of your payment bounced, you have to fork over another $37. Any student or parents reading this need to think twice about getting themselves into a product like this.
It could hurt you
Missing a payment or two because of high interest rate and high fees from Discover Card can hurt you. Just like on time payments are reported to the credit bureaus, missing payment or late payment are also reported to the credit bureaus. If you end up with a credit card from Discover and you got tripped up by high interest rates and high fees, Discover will report this to the credit bureaus and they may end up offering you a disservice.
Thanks to federal regulations, credit card companies have to disclose their fees and interest rates. However the real terms and fees are hyperlinked on Discover’s website and it’s hard to find if you aren’t careful.
Okay, for all your business and finance majors, this might be a review. However for the rest of us, compounding interest is what credit card companies like Discover charges you. To put it simply, compounding interest is interests on top of interest. Let’s say that you own $500, and you are only making minimum payments each month and you are carrying a balance on your credit card. The interest accrued on your balance is added to the total balance and the credit card company is charging you an interested on the prior interest and balance together. This is a single biggest factor on how students get into mountains of credit card debt. The credit card companies wants you to pay the minimum payment so they can keep on charge you interest on top of interest. Get educated on compounding interest here: https://en.wikipedia.org/wiki/Compound_interest
The Fluid Differnece
Fluid App believes there is a better product and better solution for our students. A product that carries 0% interest and 0% fees. We don’t believe in penalizing students, we believe in rewarding students. We don’t believe in making millions off of the back of our college students, we believe in financial education.
Fluid is an app where you can borrow up to $500 dollars and pay back in 3 to 6 installment payments. We report this activity to all consumer credit bureaus so you get the benefit of building a great credit score.
Ever wonder about what your cross town rival college is doing with their credit score? Fluid provides a head to head contest between all universities on their average credit score. If you do well, your school will do well. Help your university rank higher by borrowing less, making on time payments and be careful with student credit cards that will cost you a fortune.
Download Fluid App at: https://itunes.apple.com/us/app/fluid-app/id1157853544?mt=8
Founder and CEO
Timothy Li is a serial FinTech entrepreneur. He is the Founder & CEO of Fluid Credit, a credit building app exclusively for 22 million university students. Tim has held various C-level & advisory positions at RocketLoans (Quicken Loans), RealtyMogul, Kabbage, LoanDepot, Mosaic, Blinker, Think Finance, Experian and JPMorgan Chase. He’s is a senior contributor at CrowdFundInsider.com and speaks at various FinTech conferences.