Often students need money to pay for their college studies and other expenses. If the student is not engaged in any part time or full time job, then he /she has to ask for financial help from their parents. The problem arises when they are not around and the student needs immediate cash. So, in this situation a student credit card proves to be beneficial.
Which credit cards should students go for?
Many credit card companies provide student credit cards and some of them lure the students by their attractive offers. Some aggressive companies offer lower interest rates and free application forms. Initially most of the parents deposit some amount for a student for their first credit card account. They also pay the bills if the student fails to pay in time. A good credit history always helps in availing a credit card. So parents should make their children aware about the importance of maintaining good credit record. It is advisable that students should go for the reputed ones like American Express, Visa and MasterCard.
What are the basics of student credit card?
In countries like USA, Canada, UK, education is expensive. Most of the students fail to manage their finances as they are spendthrift. The credit card companies are smart enough to target these college-going teens. It has been estimated that an average college-going student’s credit card crosses a credit limit of USD 7,000. Most of them have more than one credit card. These inexperienced and over enthusiastic students use credit cards haphazardly. As a result of which it usually crosses the card limit and they end up paying the principal plus interest, which can range up to 15-20%.
The student credit cards are not an alternative to student’s loan. The students should keep in mind that amount of money on such credit cards will not cover the education cost. But it can be a good substitute for pocket money which they ask from their parents. All the students above the age of 18 years can apply for a student credit card. With this card they make purchases but they need to be rational. So it is advised to use the card judiciously so that the students become financially independent under the watchful eyes of their parents. Benefits of student credit cards:
There are many benefits of student credit cards. The student credit cards allow their users to understand the benefits of availing credit even before they graduate from college and taking up full time occupation. For most college goers, their student credit card is their first credit card. It is like a doorway to their lines of credit in future. Some of the benefits-
- These credit cards start with the credit limit of $500-$1000.
- The interest rate is usually lower than normal credit cards which vary from 10% to 20%.
- You can apply for a student credit card even if you have poor or no credit history.
- Most of the credit card companies offer student credit cards. So, it is easy to access.
- The best student credit card offers can come with 0% APR.
- The students can use these credit cards to avail gasoline, book tickets, or for cash back credit cards.
- These credit cards do not require annual fees.
Some disadvantages of student credit cards:
The student credit cards are almost the same as other credit cards. They are used in the same way as other credit cards are. Some differences come into picture for student credit card users, because they lack prior experience in using credit cards .Therefore, sometimes the credit card issuers are at risk when approving student credit cards for students who have little or no knowledge about the usage of credit cards. Often the students fail to manage their finances competently, so this puts the student credit card issuer at risk of receiving the monthly credit card bill payments on time.
To save themselves from all these hassles the student credit card issuer usually requires a parent of the student to co-sign the application form of the student credit card. Also, the credit limit which is assigned to student credit cards is lower than what is for the other credit cards. But still the assigned credit limit is sufficient enough to fulfill the needs of the college students. In order to dissuade college students from overspending they assign a higher interest rate to the student credit card.
Most of these impositions are actually advantageous to the student, who is still learning to manage the usage of credit card. Often through these the student credit card user establishes a good credit history. In future a good credit history plays an important role for the students, when they apply for more credit cards or loans. It will benefit a student if he/she learns to use a credit card in a reasonable manner.
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