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 would not qualify for standard credit cards. It offers students the opportunity to dive into the world of financial independence.[efn_note]Eela Dubey & Armaan Joshi. Credit Cards. What Are Student Credit Cards And How To Apply For One. Dec 19, 2023, 5:52pm.[/efn_note]
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 a regular credit card but offers a lower credit limit and little or no incentives.
The student credit card offers the opportunity to start building credit while still in college. Having a student card in college will benefit students with jobs or other income categories. It will also enable students to learn how to manage their credit responsibly.
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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.
- Rewards.
1. Low Credit Limits
One benefit of having a student credit card is that you have a lower credit limit, which 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. However, building your credit history can only happen if you use your card responsibly.
3. Rewards
Student cards offer students large rewards in 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 a means of building a favourable credit history. However, 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.
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Disadvantages of Having Student Credit Cards
Student cards have advantages, but these can be easily wiped out if you do not handle your account responsibly.
- This credit card is mainly for 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.
- You can ruin your credit score if you do not pay on time.
Even though student cards have disadvantages, they are still great for students.
How to Qualify for a Student Credit Card
To qualify for a student credit card, you do not have to be a student; you must meet the eligibility requirements, which depend on your age. For example, if you are under 21, you can get a credit card independently, but the issuer will need you to have an independent income.
Most college students do not have this. However, if you are under 21 and have no 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.
If you are over 21 years old, you need to know that credit card restrictions are less rigid after your 21st birthday. However, 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.
However, you can add any income you can access, such as your partner’s. You should not attempt to get a student credit card if you are not confident you can make monthly payments.
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How to Use Your Student Credit Card
Aside from knowing “what a student credit card is,” it is essential to understand how to use it well. Not using your card well has disadvantages, and it may destroy the credit history you have built up. So here are some ways you can use your card effectively.[efn_note]Lindsay Konsko & Funto Omojola. Credit Card. 5 Tips for Using Your Student Credit Card Responsibly. Jul 7, 2023 3:22 p.m..[/efn_note]
- Search for low-interest rates and credit unions.
- You must create a budget. A budget will be helpful if you overspend and do not pay off your balance in full. You will not need to worry about overspending when you create a budget.
- Pay off your credit in full and on time every month. Failure to do so 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 suitable for students who are entering college. Students can use it to make purchases, earn rewards and pay interest.