| Student Credit Cards 101
The Basics You Should Know
Student credit cards are a tricky
subject to traverse and as such there is no student credit cards 101 that you can attend
or read to understand what cards are right for what students.
Though there are no real set rules when it comes to applying
for a student credit card, there are some basic facts and tips that any user should know prior to applying.
The first thing
to understand is the difference between unsecured and secured debt.
This concept can help relieve a world of tension and
can get the ball rolling on the application process.
- Unsecured Credit Cards or Lines of Credit
Unsecured credit cards
are the norm for most credit card companies. These cards are those that allow the user to withdraw or use more credit than they have money in the bank.
This means that a user has a credit line that exceeds the amount of income or cash that they have on hand.
Since most people would simply use cash if they had it as opposed to using a credit card, this type of card is what most people use on a daily basis.
Though this may seem like a horrible idea that can only end in tragedy, using an
unsecured credit card can help bolster
credit scores, teach responsibility, and help to extend money when cash is a little tight.
For students, this type of student credit card is most likely the best option as tuition tends to drain bank accounts quite quickly.
This is most certainly a student credit cards 101 topic to discuss and understand before moving forward in the process of attaining a credit card.
- Secured Credit Cards and Lines of Credit
A secured credit card is a
line of credit that is issued to a user and that must be matched by the user with the same amount of money, generally as much as the credit line is,
as collateral should they be unable to pay the bill off.
This type of credit card is generally used to help build credit for users that have enough cash to pay but want the added benefits
of having a credit card.
This type of card is far easier to attain as the credit card company or issuing bank
has collateral and does not stand to lose as much in the long run.
A secured credit card is not overly
common, but students may have an easier time attaining one.
- Extras Like Points, No Interest, and Added Discounts
The next issue to consider is any added benefits that a credit card company may offer to a student on a student credit card.
Added extras are always welcome and student cards generally have plenty to try and entice users.
The most common extras are points systems, discounts at certain venues or shops, and
no interest for a period of time. (take a look at our 0%APR and cashback student credit cards here.)
In most cases no interest is the best extra that these cards offer students.It allows time for the student
to build up funds and get ready to begin paying back debt without the added hassle of interest piling up.
With things like points systems, credit card companies put them in place to entice users to use their credit cards when it is not necessary.
Any student credit cards 101 class or tip will warn users to use these credit cards to take advantage of the rewards, but pay off the balance immediately.
Student credit cards are
a welcome option for students if they take the time to understand fully what they are getting into.