College Credit Cards – Building A Good Credit History At An Early Age
College credit cards are intended specifically for students who normally would not qualify for regular credit cards, as they do not have a steady income or a credit history. As a student, it is a good idea to establish a first-rate sound credit history at an early age, which would help you get a regular credit card in the future, regardless of your employment status.
College Credit Cards Versus Generic Credit Cards
In theory, college student credit cards are identical to regular credit cards. However, these types of credit cards are meant for college students who do not have a previous credit history. Hence, these cards have more restrictions or conditions than the generic cards. The top three restrictions include:
– Co-signature from the parent or guardian at the time of application
– Lower credit limit (Example: $500 to $1000)
– Higher interest rates than traditional credit cards: Normal interest rates on these cards are 16-18%
Advantages of a College Credit Cards
A college credit card has become a necessity for most students. The advantages are many provided you understand how the credit card works and use it with caution. Students, especially in the United States, are prolific users of this type of credit cards. This is primarily because it gives them great flexibility to manage their credit.
Students can use these cards to pay their tuition fees, to rent a car, or to fill gas. In fact, there are certain credit cards that offer low-interest rates to students who maintain good grades. These cards are also packed with rewards and benefits. They can help students to learn and manage their finance at a young age.
A college credit card can also be a prepaid one, with a ceiling on the credit limit. This ensures that the student does not overspend and it also helps parents keep an eye on their children’s spending behavior.
Characteristic and Features of College Student Credit Cards:
There are many college student credit card options from Citi, Discover, and Chase. Apart from these, there are many pre-paid card options. Most of these student cards have many similar features including:
– 0% APR for the initial period of usually 6 months on both purchases and balance transfers (typically)
– No annual fee, at least for the first year
– Online account management at no extra cost
While many of the above characteristics are also applicable to many traditional more generic credit cards, there are certain distinctive features that make the credit card stand apart including:
– 0% liability for any unauthorized charges on the account
– A good GPA helps earns points for the cards
– Theft and fraud alerts
It is a good thought for students to have their own college student credit cards. However, it is important to understand that, at an early age, bad credit could have horrible consequences. Parents can assist their kids in choosing the best credit cards based on their child’s spending behavior and repaying capability. College student credit cards promise financial freedom at a young age if they are used judiciously.
