Student Credit Card

Student Credit Card

A student credit card is a credit card with lower credit limits and when used wisely can be of immense use to the student. A student credit card can help to build the credit history for the students at a very young age. Most banks and finance companies offer such student credit cards to students in the bid to gain loyalty of the person in later life when the future larger purchases would be made.

Just like any other credit card the student credit card can be used for purchase of food, grocery, books etc. One can use the card for online payments of bills, hotel booking, ticket booking etc. It eliminates the need to keep or carry cash.

Understanding how a credit card works
Before getting a credit card it is very important for a person to know how a credit card works. Learning and understanding the details of all the aspects associated with using a credit card will enable a person to stay away from credit card debt. Although students have lowers income and lower credit limits, still irresponsibly using a student credit card can land you in debt.

Reading the credit card agreement before signing up and knowing about the interest rates, benefits, grace period, penalties, late fees etc. would help you use the student credit card in an optimum way.
Here are some of the things that you must know before you sign up for a student credit card.

1. Rate of interest:
Find out the rate of interest that would be charged to you on your credit card balance. When and how would the interest be applied. Its is important to know how compound interest works as it can turn a small balance into a big money if you are not careful.

2. Credit limit:
The student credit card usually has lower limits as the student has no credit history..

3. Annual fees:
Check out if the credit card company charges you any annual fees for their services. If yes then how much is it.

4. Grace period:
Each credit card has a grace period, which is a period of usually 20-25 days or sometimes 1 month, during which no interest is charged to you on the balance. i.e. if you make a purchase using the credit card and then pay it back during the grace period then you won’t have to pay any interest on that amount.

5. Minimum payment:
This is the minimum amount of the balance that you have to pay each month. Ideally one should pay off the whole balance in order to avoid accumulation of interest.

6. Late fees:
Check out the amount of fees that you have to pay in case you are late in your payment.

7. Other fees:
Some companies may charge you extra fees if you go over your credit limit.

8. Changes in fees or interest rates:
If there are any changes in the company policy regarding interest rates or fees, then check out whether they inform you by letter or email.

9. Rewards:
Some companies give reward points based on the pattern of spending.

Try to find a student credit card with proper interest rates, no annual fees or appropriate benefits. If possible then try getting an add along card with parents.

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