What are the different types of credit cards?

Nowadays, financial institutions offer all kinds of credit cards that have different features. It is important to understand each type of credit card to determine the type of credit card that best suits your needs. There are five major categories of credit cards: balance transfer, low-interest, rewards, secured, and specialty.

A balance transfer credit card allows you to transfer a high-interest credit card debt to a new credit card with a lower interest rate. Depending on the bank or company, the interest rate can reach as low as 0% and can typically last up to a year. If you’re often carrying a large credit card balance, this might be a good option. However, if the new credit card has a balance transfer fee and annual fee, balance transfers can get expensive.

A low-interest credit card provides either a low, fixed annual percentage rate (APR) or a low introductory APR that jumps to a higher rate at a later date. The low-interest credit card is beneficial for making a large purchase that requires several months to pay off or for people who carry long-term credit card debt.

A rewards credit card incentivizes consumers to make purchases to earn rewards. Rewards can include cash back, reward points, rebates, and airline mileage. By using the rewards credit card, you can use the cash back to reduce the credit card balance, redeem reward points to earn a free stay at a hotel, or use the airline mileage to obtain a lower priced or free airline ticket.

A secured credit card is for individuals with no credit or bad credit, who want to start establishing a good credit history. Applying for a secured credit card requires collateral upfront and the value of the collateral is usually equal to or greater than the credit limit. A secured credit card enables you to build or rebuild your credit history and eventually move on to use a traditional credit card.

A specialty credit card is tailored to meet the unique demands of a specific group of consumers, such as business professionals and college students. Business and student credit cards have the same features as traditional credit cards as well as additional benefits exclusively designed for these users. For instance, the student credit card does not require a credit history for college students to apply because most college students generally don’t have a credit history.

For more detailed information, you can visit Credit.com or Bankrate.com to browse and compare various types of credit cards.

Written by: Cuihua Lin, Financial Wellness Peer Educator, University of Illinois Extension, 2018.

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.

What do college students need to know when purchasing car insurance?

Starting a college life is an exciting experience with a lot of changes. There are many expenses along with these changes. One of the most expensive costs is car insurance. Car insurance is an ongoing cost, with a fixed payment monthly. For most college students, money is short and they need to manage their budget efficiently. To have cost-efficient car insurance, it is important to understand the five key factors influencing car insurance rates.

Location: The insurance rates vary widely by zip code. Residents living in rural area will have lower rates, while those who living in urban area will be charged with higher rates. The principle is simple. In urban areas and cities, there are more cars on the road. For insurers, more cars on the road equals a higher potential for accidents.

What you drive: There are three types of vehicles with high car insurance rates, sports cars, luxury cars, and large vehicles. Sports cars and luxury cars usually have high market value and carry pricey repairing costs. Large vehicles are exposed to more damages due to their big size. Therefore, insurers charge higher premiums on these three types of vehicles.

Credit History: Insurance companies will look at your credit history to determine the insurance premium. If you have a good credit standing, you will have a great saving in premium costs; otherwise, you are going to pay more.

Driving Mileage: If you do not drive too often and your car has low mileage, you can expect a low car insurance rate. The insurers think that more miles represent the higher possibilities of getting into an accident.

Driving Record: Insurance companies will be cautious of drivers who cause accidents. These drivers generally pay more than those who are crash-free. Good driving habits actually can help you lower insurance costs.

I hope the discussion of the five factors above can help you feel more confident in dealing with car insurance. Just a reminder, when you purchase car insurance, please do not forget to compare different insurers to find the one that best fits your needs.

Written by: Xiaotong Tao, Financial Wellness Peer Educator, University of Illinois Extension, 2018.

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.

Why is building good credit important?

Building good credit is important especially if you want to finance any large purchases like your home, car, education, etc. Maintaining good credit will show creditors or lenders, whom you are borrowing money from, that you are responsible and have the ability to pay back the money that you borrow in a timely fashion. Creditors use your credit history to determine how much interest that you would have to pay on a loan. If you are considered to have good credit, you are more likely to get a lower interest rate because you are of less risk of not being able to pay back the money that you owe.

Some employers also check your credit score before hiring. An employer that is checking for credit scores during the hiring process might be looking for someone that is responsible and reliable. If you are not responsible and reliable with your money, how would you fare in a workplace where your coworkers and company will rely on you.

Maintaining good credit will show that you are financially responsible and on the right track. The economy runs on credit and if you need to borrow money, you must maintain a good credit history.

Written by: Tony Li, Financial Wellness Peer Educator, University of Illinois Extension, 2018.

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.

What happens when you cut out your daily milktea or fancy coffee drink?

Milktea drinks taste so good. Just thinking about the creamy milk, the refreshing tea flavor and the chewy Bobas might have already made you want to grab a cup. Or, perhaps it’s the aroma of coffee that tempts you!

However, have you ever thought about how much the daily store-bought drink costs you? Let’s do the math quickly. Let’s say one drink costs $4.50, and you buy it five times a week. Then the total adds up to $90 per month and $1080 a year. I mean $1080 a year! That gives you more than enough money to purchase a great smartphone!

What if you don’t drink milktea or coffee? Well, these drinks are just an example that shows you how small amounts add up. The most important thing is to identify what the small expenses are that suck your money when you are not paying attention. Similar things can be sweets, late night meals, water from vending machines, etc. Once you identify the small amounts that you spend, add up their total costs for the year. Is it worth it?

For more examples of how small amounts add up, view Small Changes Add Up on our website.


Written by: Linxi Liu, Financial Wellness Peer Educator, University of Illinois Extension, 2017

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.

How can I save on textbooks?


    With the continued increase in tuition and fees, the cost of attending college has become even more burdensome for many college students. In addition to the rise in tuition and fees, according to National Public Radio, the cost of college textbooks has doubled over the past decade. The tuition and fees are predetermined and fixed costs that students do not have control over. However, you do have control over the cost of textbooks and can reduce the textbook expense by shopping wisely.

Buying used textbooks is a great way to cut down on cost. Used textbooks are sold at discounts. The amount of the discount depends on where the textbooks are purchased. In general, the university or online bookstores offer smaller discounts compared to individual student sellers. Some used textbooks are in almost-new condition and some are a bit more worn. For those textbooks that are not in great condition, they often have notes in the margins and highlighted passages which are helpful for studying.

An alternative way to save on textbooks is to purchase electronic versions, also known as e-books. E-books are much more convenient for some students in comparison with hardcover or paperback books. With e-books, you are able to access the books from anywhere and don’t have to carry as much weight with them. In addition, with today’s technology, you can take notes and highlight passages on e-books with ease.

Last but not least, renting textbooks is another great option for you to reduce the textbook expense. Nowadays, more and more bookstores are offering textbook rental services. Both printed and electronic textbooks can be rented from the physical or online bookstores. Renting e-books is typically less expensive than renting printed textbooks. One important thing to keep in mind when renting printed textbooks is that the books must be in the same condition when they are returned. Otherwise, the bookstores will charge extra fees for damages to the books.


Written by: Cuihua Lin, Financial Wellness Peer Educator, University of Illinois Extension, 2017

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.