Student credit cards are designed for people between the ages of 18 to 21 who have limited or no credit history. Understanding how these cards work will help you choose one that is best for you. You should ask yourself the following questions;
Are you eligible?
Back then before the Credit Card Act was enacted in the year 2009, students were bombarded with t-shirts, beach towels and other trinkets to entice them to sign up for credit cards when they set foot on campus. Currently, credit card issuers can’t market within 1000 feet of campus and applicants younger than 21 must prove their income or have a co-signer, such as a parent, on a credit card application. Many issuers will allow co-signers while some will reject this idea.
For proof credit card issuers may consider money you have earned from a part time or a full-time job, or money that is deposited regularly into your account by another person or your employer.
Is a student credit card right for you?
One reason why you may want a credit card is to begin building your credit history. Companies that will issue credit cards expects applicants will have little or no credit history and an average credit score. Paying your bill on time each month – preferably in full to avoid interest – can help you establish good credit and demonstrate to lenders that you can manage money responsibly and efficiently.
What to look for.
Some of the factors to consider when comparing student credit cards includes:
No annual fee.
Most student credit cards don’t offer rewards. Likewise, a good student credit card should not have an annual fee.
No foreign transaction fees.
Some credit cards charge this fee – usually 3% of the transaction – on purchases made on a foreign currency. So, if you plan to study abroad or travel internationally, you should consider cards that don’t charge this pesky fee.
Many credit card companies offer free credit scores and monitoring. As a student, you should take advantage of this feature since it will help you track your progress towards a good credit score and let you see areas of potential improvement.
Bonuses or incentives.
Some student credit cards may offer cash bonuses for good grades while others may reward you with a higher credit line once you have made several on-time payments.
Alternatives to student credit cards.
If you are not eligible for a student credit card, you ought not to worry but see whether you can become an authorized user on parent’s card. You will actually get the benefit of the primary cardholder’s credit history, but you aren’t legally liable for paying the bill.
Another alternative is a secured credit card, which will allow you to make security deposit that becomes your line of credit. After you have shown you can manage credit responsibly, the issuer may upgrade you to an unsecured card and return your deposit
Whether you apply for a credit card or not go another route, establishing credit and managing it well will set you up for a responsible financial life.