Student Credit Cards
If you’re in college and starting your financial life, a good student credit card can give you a head start in building your credit. If you pay your bills on time and borrow responsibly, the positive credit history you build now will pay off when it’s time to buy a new car, finance your first home or apply for a more exclusive credit card.
What is a student credit card?
Student credit cards are primarily marketed to school users who do not have a credit card of their own name. They can be a good way to solve the problem of "no credit history and no credit card".
Student credit cards allow you to borrow a certain amount of money each month. You can then choose to pay off the balance in full over a period of time (interest expense) or at the end of each billing period.
Student credit cards can help you get rewards and, in some cases, short-term interest-free financing. More importantly, the student credit card is the first step in establishing a good credit history, which is essential for getting a preferential interest rate on future loans, renting your own apartment and getting low insurance premiums. Some credit card issuers even offer special rewards to student cardholders who have achieved outstanding results in school.
What are the benefits of student credit cards?
Low credit requirement
Students often do not have a credit score or have no particularly good credits. As a result, student credit cards often have lower credit requirements.
Student credit cards are a great choice for those who want to build a credit score. After all, their use of student credit cards will be recorded in their credit history, providing future lenders with a reason to be confident in their abilities and their willingness to meet their debt obligations.
Rewards and bonuses offered on student cards may be smaller than other regular cards, but it still can give them a number of rewards back for using them.
Reasonable introductory rates and fees
Lots of credit cards for students offer 0% introductory rate on purchases and balance transfer for a period time. After the introductory period, the regular APR will be variable.
There is no annual fee on some student credit cards, which is great for students who want to minimize the cost of credit card use as much as possible.
Foreign transaction fees
Some student credit cards don’t charge any foreign transaction fees, are suitable for students who have plan to travel or study aboard.
What do you need to apply a student credit card?
To be eligible for a student credit card, you have to fulfill a few basic requirements.
You must be a college student.
On the application you’ll see a space to list your school’s information. The credit card issuer may investigate the accuracy of your information, so don’t lie.
You must be at least 18 years old.
Age is another important factor. You must be at least 18 years old, because minors cannot sign a legally binding agreement.
You must be a sole account owner.
If you want to apply a student credit card, you need to have or earn enough money to support yourself. This is the law.
The federal Credit CARD Act of 2009 illuminates that “any credit card applicant under 21 years of age must demonstrate his or her independent ability to make payments on the account or have a co-signer who is 21 or older with the ability to make payments.”
Therefore, find a job, whatever a summer job or part-time job, anything like, but it can’t be student loans, grants or scholarship money, though.
How to use a student credit card?
Start to borrow money
If you don't start to borrow money, you can never start to build your credit history. You have to prove to lenders that you can borrow small amounts so you can eventually borrow large amounts.
Know your limits and do not spend more than you have
If you try to charge something that exceeds your credit limit, you may be rejected, which is embarrassing. To make matters worse, if the transaction is completed, you may receive an over-limit fee and an APR rate hike.
It’s a good way to write down your income and list your expenses monthly. Freeman suggests that it is easy to do that if you can create pay-as-you-go mentality when you use your credit card.
Pay your bill on time
It’s important to pay in full on time, because payment history plays a big part in your credit scores. You can use mobile banking to track your purchases and also sign up for reminders to let you know when your payment expires.
Check if the issuer allows the student cardholder to upgrade to a "regular" card when they are ready.