Many Student Credit Cards
Offer Students Cash Back Opportunities
Student credit cards are
specifically designed for students so that they conveniently meet their
daily expenses or other expenses related to studies, while studying away
from home or at the time of need. These cards offer low interest rates
compared with the regular credit cards and often free application. The
parents can pay for the expenses met by their children on the specified
due dates. A very interesting feature of such cards is that the parents
can set a voluntary limit for the student credit card issued to their
children. This ensures that the children do not have extra money to fondle
with.
Some student credit cards also offer rewards to the students. These
types of cards allow the students to earn one reward point for every
dollar spent through their student credit card. They are expected to
collect these reward points and then exchange them for gift items or
hampers from several options provided by the cardholder against those
reward points.
Student credit cards also offer students discounts on purchase of books
and other goods from specific stores. Many student card providers give
the students cash back opportunities, wherein they earn some on each
spending through their student credit card. This means that the
card lender returns them a fixed percentage of every dollar spent through such
cards.
The student credit cards can be broadly classified into two categories:
Secured credit cards and unsecured credit cards. These two types are
described below:
Secured Credit Cards for Students - These credit cards
necessitate an upfront payment that serves as the credit limit itself. The student cannot spend anything after the limit ends or until the card
is re-loaded. This feature makes the student credit cards more or less
like the prepaid debit cards. Such credit cards are in the
student's
name and hence allow the students to build credit scores at a tender
age. Since the credit limit cannot be extended, the students are not at
risk of getting into debts and thus any adversities relating to such
debts.
Unsecured Credit Cards for Students - These credit cards are
similar to the regular credit cards, wherein the parents can extend
their credit limits to their children. These cards give the students
more freedom, as they are free to spend as much as they can and dues are
paid by their parents. The students can also avail of loans by using
their unsecured student credit cards.
Build Credit Scores at a Tender Age
- Students can build strong
credit scores by using their student credit cards carefully. They must
see to it that they spend only what is required so that there are no
hiccups while paying. Good payment practices are important because the
lenders of such cards maintain such records and provide monthly reports
on the same to different credit bureaus. These bureaus maintain such
records for millions of cardholders and give the credit card companies
all the necessary data regarding the users for verification. It is only
after obtaining a green signal from a credit card bureau, a credit card
company issues credit card or other credit facilities to the applicant.
Clean records with these bureaus strengthen the student's case if they
intend to avail of loans or any related facility to meet the
requirements that can come up in future. Therefore, while availing for
secured or unsecured credit cards for their children, the parents must
ensure that the lender has a system of reporting their credibility to
one of the national credit bureaus.
Note that such a tracking system is generally offered with secured
credit cards. Therefore, in case you are opting for an unsecured
students credit card, check whether the lender is offering a similar
feature with the card.
Besides, students keep such credit cards with them generally until they
are twenty years old. This gives them sufficient time to build a healthy
relationship with the lender, which in turn reflects positively on their
credit scores.
Use Your Student Credit Card Carefully - It is the responsibility
of the students to use their student credit cards carefully. They need
to spend only what is necessary, pay all monthly dues on time, and never
exceed the credit limit. If they fail to control their expenses and
default in paying, all the benefits can turn against them. They may end
up ruining their credit scores, causing heavy damage to their
credibility that could take a long time to heal.
To avoid such circumstances, parents must closely monitor all the
expenses made by their children through the student credit cards.
