The Student Credit Card

If you have been thinking that you can'™t get a credit card in your name before you complete your education and get into job, you are wrong. There is a breed of credit cards which is available especially for students. These are called '˜Student Credit Cards'™.

Student credit cards are the same as other credit cards except for the fact that they have additional restrictions and higher charges. Most of the student credit card applications will need the parent to co-sign it as a guarantee. Moreover, the credit limit on student cards is really low ($500-1000 per month). This is based on the typical spending needs of a student and also to cover the credit card company'™s risk in issuing a credit card to someone who has never used it before. Also, since most of the students applying for a credit card have no history (or credit rating), this being their first credit card, the APR on student credit cards is generally higher than that on the other credit cards. This is again from the perspective of reducing the risk associated with issuing a credit card to someone who'™s paying capabilities and habits are not clear yet.

Student credit cards are a great opportunity for students for developing good spending habits and a responsible behavior towards financial transactions early in their lives. In fact, things like lower credit limit act as good controllers and besides being a risk mitigation mechanism for the financial institution it is also favorable for students. The student credit cards act as good training ground for students by helping them in learning more about credit cards so that they have the knowledge and capability to select a good credit card later on in their lives.

All credit card companies also include instructions about protection against fraud, the fee structures, reporting credit card loss etc at the time of credit card delivery. It'™s important that the student goes through all of these instructions so as to increase his knowledge of credit cards and also to be able to take advantage of the benefits associated with them.

As with any credit card, student credit card can also lead one into a debt trap. Considering that this is your first credit card as a student, there is a very easy way to ensure that you don'™t get into debt trap which many are fighting today. Just refrain from getting another credit card, come what may. One credit card is more than enough for a student. Also, do not overspend on your credit card. Try to remain within 60% of your credit card limit. Remember that this is a learning ground for you and good habits learnt now will go a long way in helping you in future.

A very important benefit from a student credit card is the fact that it can help you in building a credit rating. The credit rating is basically the credibility earned by you when you use your credit card over a period of time. You get good rating if you have been paying your dues in time and if you have not been overspending. This rating is built at independent credit bureaus and is used by banks and financial institutions for determining your credibility before they actually sanction a loan or a mortgage or a credit card that you have applied for.

So, not only do the student credit cards allow you enjoy the benefits of the credit cards early in your life but also help develop spending habits and credit ratings for future.

For additional information on credit cards or related topics please visit our library of credit card articles.