Updated July 15, 2022 – Getting a student credit card can be a bit overwhelming if this is your first experience applying for a credit card. The tips and pointers below will put you on the path toward making informed decisions about which student credit card to choose.
Student Credit Cards
Student credit cards can sometimes be a necessity when young people begin their university studies. This may be particularly true if there is not much financial support coming from the home. A credit card can help you make ends meet and be able to afford the high cost of a college education. It is also a good time to start building a good credit history so that upon graduation, it will be easy for you to buy a car or a house.
Before you look for a plastic card to acquire, make sure that you know the difference between regular credit cards and those that are specially designed for students like you. Following are some of the benefits of student credit cards.
• Minimal Requirements – It is to be expected that if you are getting your first card, you have not yet established a credit history. This will disqualify you from getting a traditional credit card. Credit cards for students are taking this into consideration and are more lenient when it comes to this requirement.
Some companies will just require you to have another member of your family to co-sign with you on the application form. This is to assure the credit card company that somebody else would cover the debt in case you default on your payments. To avoid giving your family additional financial headaches, make sure that you are always updated on your payments.
• Lower Fees – Student credit cards usually waive annual fees and charge lower fees to make sure that you do not incur heavy debt on your first credit card. This is similar to the reduced fees offered to people who have shown poor payment history on their regular credit cards. The difference is that for students, it is intended for you to meet school needs.
If in spite of the low-interest charges you still fall into debt, you may try to get a balance transfer deal. In this arrangement, you will be allowed to pay your balance in fixed amounts for a certain number of months at no interest. However, since you may not have established a long enough payment history yet, you may be denied. You can ask your credit card company if they provide this service to be sure.
• Protective Spending Limits – Student credit cards provide a good learning experience on managing your own finances without incurring too much debt. Credit card issuers know this that is why in order to help you, they limit your ability to use your credit card by setting a lower spending limit compared to a regular credit card. This way, even if you overspend on school expenses, you will not end up incurring big debts that will take years for you to pay.
Using student credit cards to pay for school needs is a convenient way to go about your daily life at the university. Just remember to use it wisely and to always pay on time. Avoid payment defaults as they will only bring additional costs for you. Try to spend only what you can afford to pay.
Read ➤ Best Debit Cards for Kids
Student Credit Cards & Student Prepaid Cards
Credit cards have become more and more popular on college campuses all across the country because more credit card issuers have created cards specifically targeted toward college students. Student credit cards with cash back rewards can be a great way to manage expenses and reduce costs with cash back rebates. Despite the much-needed offers, rewards, and discounts aimed to help any student’s budget, it’s still important to make informed and educated decisions on a student’s credit card. When used to the best advantage, student credit cards are an excellent beginning to a good credit rating. Remember to use your student card in moderation and pay your bills on time to avoid credit charges.
The surest way towards a successful relationship with a student credit card issuer relies on the individual, not the card, -it’s important to always be responsible with every major financial decision, and to learn discipline with your finances. We have a great selection of student credit cards below – Free to Apply!
Another great option for students is getting a prepaid credit card. They are convenient, accepted anywhere other credit cards are accepted, are interest-free, and there is no risk of overdraft. This can be a really good alternative that gives all of the conveniences that a credit card has to offer while controlling spending by setting a spending limit to the amount loaded on the card. Prepaid credit cards have no credit check and you don’t need a bank account so almost everyone at least 18 years old can get one.
How to Choose Student Credit Card in the USA
APR – Annual Percentage Rate, which is the rate of interest charged on your card balances per year. In many cases, student credit cards have a higher APR than a standard credit card because it’s viewed as riskier to loan money to students. APR is not really a simple calculation and if you only make the minimum monthly payment on your credit card balances this can really add up. Student credit cards tend to have introductory offers of 0% APR, however, this usually wears off in as little as six months. The preferable ongoing interest rate should be on the lower end of eleven to nineteen percent which is about average.
Read ➤ Student Loan Credit Card
Introductory Offers – Most credit cards, including student credit cards, come with attractive introductory offers meant to appeal to their targeted audience. Sometimes it’s a 0% APR, or a combination of offers, such as a rewards program, student discounts for books, housing, car leases or purchases, and any number of other offers. While one should take advantage of the less costly and more useful introductory offers, one should also be aware of the ongoing APR, and whether it will shoot up to a rate higher than you’re able to pay. Other benefits are often offered as well, –if there are membership fees, only choose the programs that best suit your needs, and will be the most useful.
Penalty Fees & Default Rates – Penalty fees are just what they sound like, –if a card owner defaults on a payment, leaves a balance unpaid for a long amount of time, or exceeds the credit line, penalty fees may be deducted from your bank account, or from your credit line. The default rate is like a penalty fee, if a payment is not paid in full or missed, the card issuer may adjust your APR to a higher rate, making the annual interest more costly. Ask your student credit card issuer what are the triggers for the default rate to rise.
The bottom line here –look for student cards without an excessively high APR, make payments on time, and always try to pay more than the minimum payment to reduce debt and interest charges.
Benefits of Student Credit Card in the USA
- Building Your Credit
- Earning Rewards
- Protecting Against Fraud and Theft
Student Credit Card Rewards in the USA
Student rewards credit cards can be extremely useful, since college students are more often than not, short of cash. Some of the bonuses and rewards offered by this card are: discounts on gas, car maintenance, rebates on leasing or purchasing a vehicle, travel benefits, such as car rentals, airline tickets, hotel stays, discounts on books, and other school-related materials, just for a few examples. It’s important to determine which student rewards credit card is the most beneficial to your needs, both with savings, and possible expenditures.
One excellent example of a very useful student rewards credit card is the Discover® Student Card, which offers a 5% cash rebate on purchases made in variable categories, usually popular items that appeal to students like travel, apparel, gas, restaurants, movies, and more. A 1% cash rebate is provided for all other purchases. Some cards only offer a 5% cash back rebate on certain categories as an introductory offer, whereas, after six months, the rate lowers, and a 1% cash rebate is provided for all other purchases, that last through the introductory offer, and as an ongoing rate.
Other student rewards credit cards offer mainly rewards geared towards vehicle purchases, leases, gasoline purchases, car maintenance, and so on. Sometimes this is offered in a point rewards system, while others are based on cash rebates which can be redeemed as money off a purchase. It’s up to the individual to decide which student rewards credit card suits one’s needs the best, and as prudently as possible, reviewing each of the terms and conditions separately, and comparing offers.
How Student Credit Card Interest Works in the USA
You won’t owe interest on purchases as long as you pay your balance on time every month. If you only pay part of the balance by the end of the grace period, the remainder carries over and accrues interest that will appear on your next billing statement. New purchases may not receive a grace period and could begin accruing interest immediately.
You can quickly fall into credit card debt by carrying a balance and continuing to charge purchases to your card. If this is you, stop using your credit card until the balance is paid.
How to Build Student Credit History in the USA?
Perhaps one of the most important lessons to learn about one’s first credit card is how a student credit card will affect your credit rating and your future financial decisions. A student credit card can be unexpected freedom for students with a tight budget, so it’s easy to go a little crazy with a $3,000 credit limit. However, it’s important to remember to make prudent financial decisions from the very beginning, your first credit card will be the doorway into a world of credit opportunities, and future loans, vehicle purchases, and so on.
A high credit score will open up new offers for the future, such as standard credit cards, or rewards credit cards. Also, as loan opportunities, and several other beneficial financial offers. Your credit score will continue to serve you throughout life, and a student credit card is an excellent beginning, provided of course that you manage it with financial discipline.
A low credit score can stay with you for several years, unfortunately, and it is also easier to attain than a good credit score. With so many student credit cards offers available, it’s easy for any younger person to end up spending more money than they have with their newfound financial freedom. It’s always important to remember to continue responsibly managing your credit, in order to keep from falling into a dangerous cycle of debt.
Managing your first credit card will have a positive effect on your credit for several years, and will continue to influence the future of financial decisions, made not only by you, but also by the creditors considering providing loans, or allowing credit increases. It can also work against you if you do not act with financial responsibility. With good habits formed early, your financial future can be brightened with a student credit card, though it takes work.