Student Credit Cards

Overview

Student credit cards can be used for two purposes: to pay for the student's college education and to help the student sustain while in college. They help students understand the value of money and also become financially independent. Whatever charges are incurred on the card must be accounted for and paid back. Many student credit cards are co-signed by the parents, but this is not always the norm.

How It Works

The students, and sometimes the parents, apply for the card with one of the number of institutions that offer this service. The student's credit is checked and that determines the amount of interest that is set for the card if accepted. Many times even those with poor credit can qualify, but the interest rates are staggering. There is usually a limit set as to the amount that is available for the card. Once the paperwork is done, it is up to the concerned parties to ensure that spending is done responsibly. They work the same way as the traditional credit cards.

Benefits

Student credit cards come in handy during emergencies while a student is away at college. What constitutes an emergency must be clearly determined before handing the student a card. If the student is living at home and can be more closely monitored, it is a good idea to have purchases or expenses put on the card and then ensured they are paid off. This establishes good credit that will help the student for the rest of his or her life. To obtain and maintain a good credit score is one of the main purposes of student credit cards. There are students who show a great deal of responsibility and maturity when it comes to student credit cards, but there are others who are quite irresponsible too.

Cost/Pricing

Interest rates and spending limits on student credit cards vary. Annual fees may also be involved. Always read the fine print when obtaining a credit card for any reason. Make sure the student understands the applicable charges. Many times the parents pay for these costs, but some feel it is part of the student's learning process to pay the fees and interest charges. This is a purely personal decision. For some of the cards, the interest rates vary after the trial period. If they have any unpaid balance or debts, they will also be charged along with the new rates. In case you fail to make regular payments, there is a chance of losing the privilege of using the card or the card issuer will count on the co-signer of the card.

Timing

Student credit cards are good for students who are actually out of the home for the first time. Students at home can also use them in case of emergencies. Choose a credit card that offers low spending limit and low interest rates.

Companies/Industries

Student credit cards are offered by most of the financial institutions, both public and private, with varying fees and conditions. There are also many banks, societies, and other companies that offer student credit cards. Some of them check your credit history before giving you a card. Some companies that offer student credit cards include Citi Cards, Bank of America, and Discover.