Student Credit Cards: How Are They Different?
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by: barrywaters
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Word Count: 438
If youre a college student and youve been bombarded with ads for student credit cards, youre probably wondering whats different about them. After all, the bank offers student checking and savings accounts with options tailored to a students needs. What about student credit cards is specially tailored to your needs?
The most important difference is that its easier to be approved for a student credit card. Regular credit cards are choosy about the credit histories of the people they approve, and usually require them to have a solid source of income. When you have barely any credit history and are too busy with school to hold down a full time job, meeting credit card issuers demands can be a problem. However, companies that offer student credit cards understand. Some issuers ask you to find a cosigner, such as a parent, who can afford to take responsibility for your debt if you default. Other credit card companies dont ask for cosigners. If you choose a card that requires a cosigner, be aware that the cosigner can see all the purchases you make. If you dont mind, then taking on a cosigner is the more secure choice. But if you prefer your privacy, then pick a card with no cosigner requirement.
Student credit cards also offer perks like money back on purchases. You could get back as much as 20% if you buy at the card companys partner retailers. That can be a substantial savings. Just check beforehand to make sure the stores you can save at are the stores you like to go to.
The tradeoff for getting a credit card without a credit history is that the company covers the risk of taking on unproven creditors by slightly raising the interest rate on their student credit cards. Many student credit cards offer rates at least a few points higher than the going rates for regular credit cards. Shop around so you can compare as many offers as possible, and make a low interest rate your key consideration in picking a card. Dont let offers of 0% interest turn your head. Promotional offers last six months or less, then the interest rate jumps up to the cards real interest rate. A higher interest rate will result in increased monthly payments, but responsible use of your credit will reduce its impact. Keep a low balance and pay your bills on time religiously so that when you leave school and get a job, it will be easy to trade your student credit card for a regular card with a lower rate.
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