Just as the term itself suggests, student credit cards are credit cards meant exclusively for students, many of whom are yet to earn a documented income with employment. Credit card issuers are mindful of students and their credit challenges so they make accommodations for students when building student credit card offers specifically. Typically, the only constraint when applying for a student credit card is the age of the student, and as mandated by the law of the country, which is typically 18 years old and above at the time of application. In many ways, a student credit card is very similar to traditional, run-of-the-mill credit cards. But the major difference, is the standard APR, or interest rate, levied for card purchases, which is relatively higher than a traditional credit card APR.

Credit Card Use & Credit Score

Student credit cards provide more financial flexibility for young students. But, while it may come in handy when paying the rent, paying tuition, purchasing books, and other necessary items like food and clothing, unbridled card swiping can sometimes lead to financial trouble, especially in the form of poor credit scores and damaged credit histories. To a certain extent, this can be blamed on a lack of education or awareness as young people, often times, will not think too much about the concept of credit scoring or the idea of building a good credit history. As a result of this lack of awareness, they will typically not restrain themselves from using the credit card freely either.

The danger of poor credit scores will not become readily apparent, but will certainly become apparent when the student approaches a bank for credit at a later point in time. Credit profiling or credit scores, as determined by any of the three credit bureaus, represent an individual’s credit life history, and black marks on credit histories, however they are acquired, will make it difficult, at worst, and more expensive, at best, to secure the lowest possible interest rate on the loan or financing. So, consequently, even if one manages to get the home loan or car loan, for instance, the interest rate, in order to accommodate the increased credit risk perceived by the bank, will be higher than normal, and in turn, much more expensive for the borrower. The bottom line is that student credit cards represent a potential risk to future economic standing if the cards are not used judiciously.

Using Student Credit Cards

As previously mentioned, it is clear that uncontrolled use of a student credit card can easily damage an individuals budding credit scoring and credit history profile. But on the flip side, intelligent spending and timely payback can go a long way toward building a solid credit history and credit score. Using the card for necessary purchases that are well within his/her payback capabilities and making the payments well within the due date can improve ones credit rating tremendously.

Credit Bureau Reporting