What is a Student Credit Card?
A student credit card is a starter card for students enrolled in an accredited four-year university. Compared to other cards designed for first-time cardholders, the student credit card offers a lower fee and interest rate with more rewards. Most financial companies give these incentives to students as a marketing strategy to have valuable long-term customers.
According to statistics, students studying for their college degrees, after graduating and getting employed will earn more money and have better credit cards. And most always keep their first credit card providers for a long time. It creates long time benefits for the company and motivates them to give students better rewards.
Is it a Great Idea for University Student to Apply for a Credit Card?
A credit card can be a problem if not utilized well; most students have less experience on how to use a credit card in moderation. However, for most students, the benefits of having a credit card outweigh its disadvantages. Here are some of the reasons why a student should consider getting a credit card:
- The convenience of the ongoing credit
- The opportunity to build a positive credit history during the college years, this gives the student a head start to qualify for better types of credit cards when they graduate. Some of the credit cards they can be eligible to get include Mortgage, car loans, and even some prospective landlords, and future employers usually check credit scores and reports.Â
A bad experience with a student credit card can cost you both in terms of student credit history and financially.
Requirements to Apply for a Student Credit Card
For many years, students easily received credit cards from card issuers who aggressively marketed them to college students and also through mail promotions. However, rising concerns of irresponsible marketing, the lending practices, and increased student debts resulted in the passage of the Credit CARD Act of 2009, imposing strict new rules. An applicant must be 21 years old and have a proven stable, independent income to support the account. If a student is below the age of 21 with insufficient income, they must get a parent or a guardian co-signer who is over the age of 21.
Do Student Credit Card Graduate when Students Do?
There is no reason to stop using the student credit card when you graduate unless the card has high-interest rates. There should be a valid reason to hang on to the account. One of the reasons is that the cardholder’s credit score is based as part of their different credit accounts, and the student credit card account might be the most extended piece of credit history the individual will ever have. The financial company issuing the student credit card has a graduation strategy for the cards; they convert them into regular consumer cards with high credit lines and other essential features. Another option for the individual is to upgrade to a different type of card that the financial company is offering, but retaining the same account with the lengthy credit history.