What is a Student Credit Card?
A student credit card is developed for college and university students who have not yet built up a sizeable credit history, and who would not qualify for standard credit cards. It offers students the opportunity to dive into the world of financial independence.
This credit card is specially made for students with limited credit history. Student credit cards are made to help students start building credit. This card functions like regular credit cards, but it offers a lower credit limit and little or no incentives.
The student credit card offers you the opportunity to start building credit while you are still in college. Having a student card in college will be beneficial to students with a job or another category of income. It will also enable students to learn how to manage their credit responsibly.
Benefits of Having a Student Credit Card
There are diverse benefits that come with having a student credit card. Some of these benefits include.
- Low credit limits
- Building a credit history
1. Low Credit Limits
One of the benefits of having a student credit card is that you have a lower credit limit that prevents you from borrowing more than you can afford to pay back.
2. Building a Credit History
A student credit card can assist you in improving your credit score and help you establish your credit history. This in turn can help you in the time to come when you will need to apply for other types of credit like a loan or mortgage. But building your credit history can only happen if you use your card responsibly.
Student card offers students large rewards in the form of cashback from their purchases or free travel rewards. These rewards can enable you to buy things you might not be able to afford before.
Advantages of Having Student Credit Cards
Some advantages come with having a student card. They are listed below.
- Most credit cards come with no annual fees.
- Student cards offer you a means to build a favorable credit history. But this is only possible if you use your card appropriately.
- You can apply for a student card with no credit history or average credit.
These are the advantages of having a student card.
Disadvantages of Having Student Credit Cards
Student card has their advantages, but they are wiped out easily if you do not handle your account responsibly.
- This credit card is mainly for only students.
- You may need some credit history to apply for a student card
- This kind of credit card has lower credit limits and higher interest rates.
- This card gives low cashback earning rates.
- If you do not make your payment on time, you can end up ruining your credit score.
Even though student cards have their disadvantages, it is still great card for students to use.
How to Qualify for a Student Credit Card
To qualify for a student credit card, you do not have to be a student, you just must meet the eligibility requirements, but it relies on your age. For example, if you are under 21 years of age, you can get a credit card on your own, but the issuer will need you to have an independent income.
This is something most college students do not have. But if you are under 21 years of age and you do not have your income, you can get a credit card on your own, but you will need a parent or another trusted adult to co-sign you on a credit card application.
And if you are over 21 years already, you need to know that credit card restrictions are not as rigid when you have passed your 21st birthday. But you will still need to prove that you have a source of income because issuers want to be assured that you can pay back what you spend.
But note that you can add any income that you have reasonable access to, such as the income of your partner. You should not attempt to get a student credit card if you are not confident that you can make monthly payments.
How to Use your Student Credit Card
Aside from knowing “what a student credit card is”, it is important to know how to use your card well. Not using your card well has its disadvantages and it may destroy the credit history you have built up. So here are some ways you can use your card effectively.
- Search for low-interest rates and credit unions
- You must create a budget. If you are the type that overspends and does not pay off your balance in full, creating a budget will be helpful. When you create a budget, you will not need to worry about overspending.
- Every month pay off your credit in full and on time. Not doing this will hurt your credit score.
- Make your payments with autopay. Setting up an autopay for your credit card from your bank will ensure that you do not miss your credit card payment monthly.
- Learn how to build credit responsibly. This is important as it will help improve your credit score.
A student credit card is right for students who are entering college. Students can use it to make purchases, earn rewards and pay interest.