Identifying Student Credit Card Basics

Summary: This article describes how to identify the basics of student credit cards.

Often, when people are browsing through the different types of credit cards available, they come across the category of "Student Credit Cards." Many people, however, are not sure what a student credit card is or why they are even offered. Generally, these cards are meant to be credit cards for college students, although they can be used with high school students as well. To better understand what student credit cards are all about, it is helpful to take a look at student credit card basics. Who can use a student credit card? While student credit cards are generally marketed toward college students, anyone can usually apply for one of these cards. Some cards, however, will ask the name of the college the student attends and will require verification in order to receive one of these cards. Why does the credit card application ask for the name of the college? Companies offering credit cards for college students realize that college students generally do not have any type of established credit history. A limited credit history makes it more difficult to receive a credit card. On the other hand, these companies realize the importance of having a credit card while in college. The fact that you are attending college demonstrates to the credit card company that you are responsible and you are looking toward your future. This gives them a small reassurance that you might also be responsible for taking care of your debts. What is a secured student credit card? A secured college credit card is really more like a debit card. With these cards, you (or your parents) deposit money onto the card ahead of time. The amount of money you can spend with the card is limited to the amount of money that has been placed on the card. Why would I want a secured student credit card? Secured college credit cards are beneficial for parents who want to give their college-aged child an allowance while at college. In addition, there is no risk of accumulating a debt that you cannot repay. What are the drawbacks to secured student credit cards? Secured student credit cards usually have a large number of fees. Often, there is an enrollment fee. This fee can be as much as $100. There are also usually annual fees or monthly fees. In addition, there is a small fee every time money is put onto the card. What kind of interest rates do student credit cards have? Secured student credit cards do not have an interest rate since you are not actually borrowing money from the credit card company. Unsecured student credit cards that extend a line of credit, however, often have a higher interest rate than other credit cards. This is not because the card is a "student credit card." Rather, it is because the cardholder has a limited credit history. Therefore, the interest rates are comparable to other credit cards offered to people with a similar credit history. Do student credit cards offer rewards programs? Some college credit cards do offer special reward programs. As with other credit cards, however, student credit cards with special reward programs usually have an APR that is higher than those without reward programs. Why should I get a student credit card instead of a traditional credit card? There are credit cards available for people with a limited credit history that are not specifically meant for college students. There is nothing wrong with getting one of these cards. Student credit cards, however, sometimes have a lower interest rate than other cards for people with a limited credit history because the fact you are attending college demonstrates a certain level of responsibility. In addition, student credit cards often have benefits associated with them that are meaningful to college students, such as discounts on school supplies.