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Student Credit Cards
 Jul 29, 2004

There is a variety of student credit cards available. These cards are typically a great way for young students to establish credit in their own name. In this article we will review the pros and cons associated with college student credit cards.

One of the best ways to build credit especially for students just starting out is by using a credit card. Because many students are interested in this aspect of their finances, companies offer student credit cards to help them get started. These types of cards are designed to help students learn about using credit, as well as start building a history.

While this sounds nice, it is important to remember that there is a dark side to student credit cards as well. It is important that students understand the dangers of getting into debt, and using their cards irresponsibly. Nearly every student has a credit card by the time he or she finishes a four year degree. This means that it is vital that students understand proper and responsible credit card use before they get their first cards.

Perks associated with student credit cards

There are a variety of college student credit cards aimed exactly at providing students with certain perks. These cards are usually easier to get then other credit cards. It is possible to get student credit cards with minimal income and no credit history. However, they come with certain restrictions:

  • Lower credit limit than other cards.
  • Higher interest rate.

Often, though, there are ways for the savvy student to offset these disadvantages. Student credit cards often come with these bonuses that are not seen with more conventional credit cards:

  • Points for good grades. Some student credit cards award students who keep their grand point average up. If you turn in your transcript each semester, and you have good grades, you can be rewarded with points.
  • Points for on time payment. In order to help students learn responsible habits, some credit cards will give extra points to students who make their payments on time. Each month, they can get bonus points for on time payments.
  • Points for going through educational programs. Another perk some student credit cards offer is through credit education. By completing a course on responsible use of credit by the issuer, a one-time award of points may be given.
  • Scholarship opportunities. While you can't buy scholarships with points, some credit cards for students offer targeted scholarship opportunities for card users.

These points can often be redeemed for things that the wider population may not be interested in. Some of the rewards that can be earned by college students with specific credit cards include:

  • Concert tickets and entrance to other events.
  • Merchandise especially dorm room merchandise.
  • Credit that can be used at the university book store.
  • Rebates for books and other college needs.
  • Partial tuition reimbursement.

Warnings about student credit cards

It is important to use student credit cards wisely. It is very easy to fall behind and then get caught with a great deal of debt. In order to prevent this, students need to practice responsible credit card use:

  • Always pay on time. It is vital to make credit card payments on time, and to pay the entire minimum amount. Send the credit card payment in at least 10 days before the due date to ensure that it arrives. Card companies count the arrival date of the payment not the post date.
  • Only buy what you can afford. Carefully consider your purchases. Do not buy something that is beyond your means. If you cannot pay it off within three months, it is most likely beyond your means.
  • Try to pay the balance off each month. You should try to pay the balance on your credit card off each month. This way you will not incur interest charges, and you will not get too comfortable with buying things on credit.
  • Carefully consider reward programs. Make sure that the reward program is something you can use. You also want to make sure that it will be worth it. Sometimes, you end up paying so much in fees and interest that the value of the reward is destroyed.

Student credit cards can be useful tools when used responsibly and correctly. They can be a great way to build credit and to learn how to maximize your financial situation and your cash flow. However, if you are not careful, student credit cards can be the first step on a path that leads to crushing debt. Be wary of student credit cards, and remember to use them sparingly.

Related Article: Pre-paid Credit Cards >>

* See the online credit card application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However all credit card information is presented without warranty. When you click on the "Apply Here" button, you can review the credit card terms and conditions on issuers website.