Student Credit Cards: How To Find The Best One

Many college students are surprised to learn that they receive many, many offers for credit cards almost the minute they apply for college. They might be wondering how they can get all of these “pre approved” credit card offers when they have little to no credit history. The world of the student credit card is becoming an extremely lucrative income field for credit card companies.

One of the reasons that credit card companies target college students, offering them cards when they have no credit history, is that most people stay loyal to their first credit card company. Whatever card they get as a young adult they are likely to keep and continue using. Also, students are often unaware of the pitfalls of interest rates and late fees, meaning that the credit card company stands to gain more financially off of a college student who signs up for their card versus a more seasoned adult.

College students are notoriously frivolous with their money, and credit card companies know this fact. Students often view credit cards as free money, spending much more money than they make on things that they do not really need. They assume that because they can pay the minimum payments that they can afford to carry a balance on the card.

Student credit cards do have a place in the college student’s life. Most college students do not have a lot of extra money in their possession. Because of this, if they have an emergency, such as a car breakdown or major medical problem, they might find it difficult to afford the treatment or repair that they need. Carrying a credit card for emergency use is very helpful for college students who is getting used to being on their own for the first time.

Also, using a credit card for a few purchases each month, and paying off the balance each month, is a good way to build a person’s credit rating. This is valuable once the college student graduates. Usually after graduation students look to make major purchases, such as buying a house or a car. These purchases usually require a loan, and in order to qualify for a loan, the person needs to have a credit history. Using a card sparingly and paying it on time helps to build a strong credit rating.

When shopping for a student credit card, use caution to avoid teaser rates. Many student credit cards bait their potential users with low interest rates for an introductory period. What happens, though, when the introductory period is over, is the credit card throws a high interest rate at the owner, often surprising them with high finance charges. When applying for student credit cards, read all fine print carefully. Also, a student seeking a first credit card needs to be aware of what finance charges and late fees they will be charged if they do not pay off their balance on time each month.

By understanding how a credit card works and carefully paying it off each month, student credit cards can be a good way to build a solid credit history and be prepared for emergencies. The danger in getting credit for college students is that they often misuse their cards. Use caution, and shop carefully for the best card.