Benefits of a Student Credit Card

The days of easy access to student credit cards are over. Changes implemented in 2010 now require students to have either proof of an income, or a responsible co-signer, before credit cards are issued. The change was instigated to prevent card issuers luring, often financially unaware, students into signing up for credit with a barrage of free offers.

The colleges were often complicit in encouraging the practice of card providers touting their wares on college campuses, receiving a cash injection from the card issuer dependant upon the percentage of sign ups. Many students ran up massive credit card debt due to handling cards irresponsibly, thus graduated with not only debt in excess of student loans, but with impaired credit reputations.

Handled responsibly student credit cards can offer certain benefits to students. The primary benefit is the opportunity they give to establish a good credit score. This is vital for easing one’s way in areas such as renting an apartment, securing job opportunities, preferential insurance rates and low cost borrowing.

Those who take private student loans should be able to secure a lower interest rate through consolidating these loans upon graduation, if a good credit history has been established. This can be done by using a credit card wisely whilst in college. This involves using a card on a monthly basis and paying the balance down in full by the statement date. Allowing a balance to roll over will attract interest which is the first sign that debt accrues.

Additionally if a credit card is used, the student should be aware of the credit limit and utilize no more than one third of it in order to build up a good credit record. Maxing the card out, even if the balance is paid off in full, is actually detrimental to one’s credit score. Learning to use a credit card wisely whilst in college can give long term benefits by teaching fiscal responsibility.

Some student credit cards offer benefits in the form of discounts or cash backs. One of the best offers on the market is the Citi Forward card which gives 100 thank you points when the monthly payment is made on time. Students should establish an automated payment to clear the balance each month to benefit from the points.

Additional bonus points are given for opting for paperless statements. Other Citi student credit cards have a range of cash back offers but potential applicants should read through all the terms and conditions to note exclusions as not all purchases attract cash back points. Citi cards require no co-signer if the student has already established good credit. The Discover range of student credit cards also offer cash backs and offers, and are available to those with fair credit.

Typically student cards offer zero percent APR for around six months, before reverting to the variable rate. Astute students can take advantage of this by putting purchases of up to one third of their credit limit on credit cards for this period, making minimum payments only. The funds can meanwhile be earning interest in a savings account and then used to clear the balance in full prior to the variable rate kicking in. This is only recommended for students who are certain to clear the total balance at the end of the introductory period.

Some students may benefit from carrying a credit card for emergencies, but it is not a good practice to rely on cards in case a dependency develops. If a card is carried for emergencies it is best to have a parental co-signer and discuss first what is considered an emergency. Students should be aware that a co-signers credit can be affected by student misuse of credit cards.

Many adults have proven that they cannot handle credit cards responsibly. However, students who take the time to understand how credit cards can be used to establish a good credit reputation for the future, whist benefiting from cash backs, can graduate with an enhanced credit score free of credit card debt.