Student Credit Cards: Don′t let your credit dictate your future
Off to college? Independence and the freedom to follow your path definitely sound great. You will be creating a future in the next phase of your life. That also means setting yourself up for future opportunities.
One way to set things up is to get a student credit card. Now, how is that going to help? We’ll answer that question and others related to it in this section.
Top 4 Student Credit Cards
What are Student Credit Cards?
A student credit card, simply put, is a credit card that comes with perks for students. Card issuers that offer them usually give students incentives for getting good grades as well as on timely payments.
These credit cards provide support, resources, and financial education. Alerts and reminders are also included in the package. Simply put, this type of credit card is geared toward the unique needs of students.
Features Compared to Other Types of Credit Cards
Getting a credit card for students is a great introduction to the realities of financial independence. With this type of credit card students are enable to build credit early in life.
As stated earlier, these credit cards come with incentives specially tailored for students. The packaged programs have rewards for early or timely payments and support options to help you in case you do miss a payment.
Here are some of the unique features of this type of credit card that you may not find in other types of credit cards out there:
- A lot of credit cards for students include a 0% fraud liability. That means any unauthorized purchases made with your credit card will not be credited to you – in other words you won’t have to pay for anything in case someone stole your credit card and used it to buy stuff.
- Rewards geared for students: students have several ways to earn cash backs, miles, rent, miles, and others.
Lower Credit Limits:
- Lower credit limits: some credit card issuers will only give lower credit limits to help prevent kids from over spending. This also makes payments easier so that students can build a good credit history.
- Useful tools: some credit card companies provide useful tools that students can use to track their spending, figure out if they are using their credit wisely, and to pay their bills on time.
Remember that ″invitation to apply″ you received senior year?
You may have received some sort of credit card invitation in the mail even before you set foot in your college dorm. That may sound fishy, right? Don’t worry about it. You see, banks and other credit card issuers do that all the time.
They do background checks on students and everyone goes through a pre-screening process. Getting an invitation to apply for a credit card via the mail simply means that you were found eligible for a credit card.
Now, before you dance around in joy, you should read the fine print. If you get one invitation from one credit card issuer, chances are you will soon get others. You should compare the different offers before choosing one or ditch them all and find a different credit card altogether. It’s all up to you.
Note that every student who has turned 21 or older who qualifies for student credit cards usually gets this invitation. Remember that these are privileges and you are fortunate enough to be one of the students to these invites.
However, do take note that this does not mean that you are automatically approved for the offered credit cards. Things don’t work that way. What banks usually do is that they do a basic credit check on you.
You were able to meet a certain criteria that they use. Now, if you are able to maintain your credit profile – that means your credit remains the same when you actually make your application, you are able to provide other application requirements, and your income meets their standard then your credit card application will get approved.
In short, when you get an invitation to apply you are already one step ahead in the application process. You just need to send your application via mail, personally, or online to move forward in the application process.
Note that the credit card company will also include the details of about the credit card they are offering. Make sure that you understand the information before you send in your application.
There are several application channels or methods in case you do decide to get student credit cards. Obviously you can apply for that card personally – the old school way. You walk into the bank, explain that you received an invitation to apply for a credit card, and the personnel there will walk you through the application process.
If you don’t have time to go a bank or card issuer’s office, then there are other options as well. You can apply for one via the internet. You need to visit the bank or the credit card provider’s website (it’s usually indicated in the mail they sent you). You can then accomplish your application there.
Another way to send in your application is via phone. You just need to verify your identification. For some types of credit cards you need to be at least 21 years old.
Another related question is if student applicants will be required to get a co-applicant. A co-applicant can sometimes act as your co-maker. That means if you default on your payments, the credit card company can charge your co-applicant as well in order to get the bill paid.
Note that if the bank (or any other credit card issuer) determines that you are credit worthy then you do not need a co-applicant. You are already in good standing, which means your credentials are good.
When Should Payments Be Made?
Remember that student credit cards are very much like any other credit card out there. A due date will be indicated in the monthly bills you will receive.
You will usually have the same due date each month. If you have lost your billing statement and you need to figure out when your payment is due, then you can call the credit card company’s customer service hotline to get that information. Alternatively, you can log into your account on the company’s website to see an electronic copy of your latest bill.
If I Have Balances on These Cards Do I Have to Pay the Balance?
After making your purchases using student credit cards, expect to get a statement at the end of your billing cycle (usually a period of 30 days). The statement will include a record of your expenditure and the total balance that needs to be paid.
The statement will also include a due date and the minimum amount that needs to be paid. In case you pay the balance indicated in your statement in full on or before the due date, then you won’t have to worry about any extra charges, late fees, and interest on the balance that wasn’t paid off.
However, if you pay an amount that is less than what is indicated in the statement then you will have to pay an interest computed against the balance on your statement. The amount of interest that you will have to pay will be shown in the next billing statement that you will receive.
The best practice, of course, is to pay the entire amount due in full. You should also make it a point to use your credit card, whatever type it may be, on purchases that you can afford to pay for with or without a credit card. Or purchase only the items that you should be able to pay for in full by the time the amount is due at the end of the month.
Why Mind Your Credit History
Establishing and then building a good credit history will benefit you much later in life. Eventually you will apply for a car loan, you will also move out the dorm and live in an apartment of your choice, or maybe apply for a job.
A good credit history is a big vote of confidence on your part. People will check your credit and if they see that you managed it well while in college then they will most likely approve whatever loan (and pretty much everything else related).
When you apply for your very first job (or any subsequent job for that matter) they will do a background check on you. A good and solid credit history demonstrates discipline, reliability, commitment, and wise money management. That tells them that you are a trustworthy person – a big plus in any job.
Using student credit cards while you’re still in college will have a huge impact in the not so distant future.
Do you have to really spend a lot using your credit card while studying? The answer is no. in fact maxing out your credit card is a bad signal for some people – it’s a sign that you can’t control your spending.
A better way to build your credit history while still a student is to make small purchases and then paying for them on time whenever they are due each month. Do that consistently and you will have a very favorable track record.
How to Claim the Rewards and Other Perks
Claiming the rewards and other perks will vary from one type of card to the next. In some cases you will have to sign up or enroll your accounts to claim rewards. Note that some rewards programs like cash backs and discounts will not require any sign up.
Instant Approval Cards
In conjunction with student credit cards, you may have heard of instant approval credit cards. You will usually see advertisements for this type of credit card on the internet. Some people are led to believe that these cards are the same as credit cards for college students.
They’re different. And don’t get all hyped up because they include the word “instant” in the name of these credit cards. Simply put, these cards are pretty much just like any regular credit card.
The big difference is that your screening process will take only a few minutes. You create an account on the credit card company’s site, enter your credentials and other info, and submit your application.
They will run a credit check on you. They will base their decision whether you’re application gets approved or not via the results of this credit check. The result is that students will find it difficult to get approved.
The reason for this is that they haven’t built up their credit histories long enough so that they will get a pretty good credit score. Remember that the screening process for this type of credit card can be a bit tight.
TIP: get a student credit card. Use it for the duration of your college life. After a couple or so years of using your card (make sure that you have paid your bills on time) you can apply for an instant approval card. That way you should have built your credit history well enough to get a higher credit score.
Note that you should always check your credit score annually. Keep an eye on your balances. Pay your premiums in full as much as possible to avoid interest. Never use your credit card for impulse purchases.
Scams: another issue with “instant approval” credit cards is the number of fraudulent websites that supposedly offers them. Before logging in your details and personal info, make sure that the site is legit – it should be a secure site.
It should also be affiliated with a bank or some other financial institution. Do you see a padlock on the URL bar on your browser? It’s supposed to tell you if a website is secure or not.
Get a Student Credit Card or Not?
Is this type of credit card for you or not? It’s up to you to decide. You may even have to ask tips and advice from your parents – you know, old age wisdom does count.
Your credit score will not seem important right now but someday it will be. How you manage your credit now while its early will affect your life tomorrow. A good credit score will make things easier for you eventually.
Good credit will make it easier for you to sign up for a plan on your cell phone. It will ease up on the rent on your first apartment. It will also make purchasing your first home a lot easier.
Having a good credit score will open up a lot of opportunities when you purchase your first car. You can also make a good impression when you apply for your first job – remember that employers do a background check before they decide to hire you. On top of that, a good credit score can help lower insurance rates.
Pros and Cons
Here are the pros and cons of getting this type of credit card. Let’s begin with the pros:
- You can make secure purchases online
- You don’t have to carry cash with you all the time
- It gives you flexibility during emergencies when you don’t have cash on you
- It offers budgeting programs for college kids
- It gives you the opportunity to establish good credit early in life
Now, here are the downsides of using this type of credit card:
- Some of these cards have annual fees, but there are credit cards for students who have this fee waived
- Note the high interest rates in some of your purchases
- If you don’t watch your spending you may end up with less money in your savings
- You may just end up with a bad credit score if you don’t manage your spending
- It’s pretty easy to overspend and lose control of your credit card use (you may end up still paying for credit card debt even after you have graduated)
Getting a credit card for college students always carries its risks. However, with proper guidance, students can learn to manage their finances and build a good credit history in this important stage of their lives. They will usually
Student Credit Cards Top Picks
The following are our picks for the current best college student credit cards. The cards in this list have a good set of features to help you build a good credit score by the time you graduate. Here we compare student credit cards so you can pick the ones that suit your needs.
Top Pick #1 – Citi ThankYou Preferred Card for College Students
The rewards system for the Citi ThankYou card is its best feature. They also provide great incentives for students who make good grades. They also offer 0% annual percentage rates for the first 7 months.
Note that the regular APR for this card ranges from 14.49% to 24.49%. On top of that they do not charge you with an annual fee.
Top Pick #2 – Journey Student Rewards
This is the credit card offer from Capital One. This card pays you 1% cash back on all your purchases. If you pay on time, your cash back for that month goes up to 1.25%.
They also offer you a higher credit line if you make good payments for the first 5 months. Note that the rewards they offer don’t expire and there is no limit to the number of cash backs that you can get.