Student Credit Cards: Your Financial Future at Stake

If you’re a young person with very little credit history, one of the best ways to build credit is by opening a student credit card. If you’re currently enrolled at a college or university, you may have noticed credit card companies on campus offering t-shirts, hats, candy bars and other freebies in exchange for a completed credit card application.

Sure, you might be hungry for a Snickers bar or in need of a clean shirt, but that’s an awful trade-off you’re getting. If you sign up for a credit card, you’re giving that company much, more more.

While this is one (bad) way to apply for a student credit card, it’s recommended that you research offers online as well to ensure you get the best card available to you.

It’s easy to compare student cards by simply typing “student credit card offers” into any popular search engine and comparing results.

And I think just about anyone would agree that the outcome will be better when you shop around with multiple issuers, as opposed to one company selling you on their one (most likely inferior) product.

Credit Cards Often Necessary to Establish Credit

While some may see student credit cards as a negative (pros and cons of credit cards), the fact of the matter is that students, like all people, need to establish credit. And the earlier you do, the better off you’ll be.

[Do you need a credit card to build credit history?]

Sure, some individuals will argue that you don’t need credit, and that you shouldn’t buy anything you can’t afford, but that’s a very short-sighted approach. Most consumers will need to secure an auto loan or finance a mortgage in their lifetime, so establishing credit early on is vital. Otherwise you may find yourself in a tricky situation down the road.

Students can usually get approved for a student credit card with very little credit or none at all. The credit limit will be really low, often only a few hundred dollars, but it will serve an important role as the beginning of your credit history.

That said, your first credit card can make or break your credit score, so be sure you pay on time and fully understand all the terms of the cardholder agreement. If you pay on time and show creditors you are a responsible borrower, they will raise your credit limit, and more credit card offers will come your way, offering better terms, lower APR and even 0% APR.

Good Credit Will Lead to Better Offers

These days, even students can obtain 0% APR student credit cards without having any prior credit, although the 0% APR period is typically limited to only six month, versus the 18 months or longer seen with credit cards for more established borrowers. Students can also take advantage of no annual fees and reward programs right off the bat.

The credit card industry has opened up its doors to students in the last decade or so, and the options seem to be growing every day as credit card companies battle for the business of young adults.

Of course, one of the major reasons credit cards target young consumers is their likelihood to carry balances and miss minimum payments, allowing credit card companies to charge outrageous APR, late fees, and more.

Student Credit Cards Require Responsibility

So before you set out to get a credit card, understand that it carries with it a ton of responsibility and the decisions you make now will affect your financial future greatly.

Anything you purchase with a credit card must be paid back, and there’s no way around that. Don’t be fooled into thinking a student credit card is free money, or a means to buy things you can’t afford.

You must continue to live within your means or you’ll find yourself in serious debt, which could also lead to a poor credit score.

A student credit card can be a crucial first step in building your credit, so make sure you fully understand how credit cards work before applying for one. It’s a privilege not to be taken lightly.  The good news is if you practice responsible spending habits, you will wind up with a good credit score in the future.

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