Student Credit cards

Various people have different needs. So the credit card
suppliers too have designed different type of cards. Besides the
normal credit cards, there are small business cards for small
business and then there are student credit cards which are
designed especially for students.

Now, what is different about the student credit cards?

You could say not much, since all credit cards work in pretty
much the same way and are used for more or less same purposes.
However there are 2 main differences with the student credit
cards and these differences are on the 2 main aspects i.e.
Credit limit and APR.

The credit limit for student credit cards is generally very low.
This typically ranges from $500 to $1000 per month. Some people
might argue the reason for such discrimination. Well, the reason
is very clear and obvious. Most of the students applying for
these credit cards have never used a credit card in their life
so neither do they have a credit rating and nor the knowledge
about credit cards. While the former is what the credit card
suppliers look for before supplying the credit card, the latter
is what the credit card holder would like to acquire. Both the
purposes are met by keeping a lower credit limit. The credit
card supplier reduces the risk that they are taking by issuing a
credit card to someone who has never used one and has no credit
rating. It's good for the credit card holder too since this
reduces their risk of damage which can be caused by limited or
no knowledge of credit cards and by bad spending habits.
Moreover, this credit limit would be sufficient for the needs of
a student in general.

The APR on the student credit cards is generally higher than
that on the normal credit cards. Again the reason for this is
same as that for lower credit limit i.e. the credit card company
or the credit card supplier is after all into business and has
to take steps to mitigate any possible risks including the risk
arising from issuing a credit card to someone who is naïve in
terms of credit card knowledge.

The credit card companies might also keep some stricter terms
and conditions on the student credit cards and generally require
a parent or a guardian's signature as a guarantor.

Since credit cards are more of a necessity than a convenience in
today's world, the student credit cards are much recommended,
especially as a learning tool in getting the students prepared
for the life. Due to their inherent characteristics of low
credit limit etc, student credit cards cannot lead students into
a totally irreversible debt situation. Students should read all
the instructions supplied with their student credit card. This
first credit card will teach them how to protect themselves from
credit card fraud, where all to use their credit card, how to
control their spending, what the various membership benefits are
etc. The earlier they learn these things the better it is.

Moreover, the student credit card will also help you in
developing a good credit rating. You shouldn't take the student
credit cards lightly. If you overspend on your student credit
card or default on your credit card bill payments, you will not
only end up paying interest on your credit card balance but also
spoil your credit rating. Remember that a bad credit rating will
not only hamper your chances of getting another credit card
later in your life but will also lead to problems in approval of
your mortgage/car-loan applications etc.

So student credit cards are a surely a good way for students to
start with credit cards.