Student Credit Cards - Excellent Tool For Students To Build Credit!

Student credit cards are specialty credit cards that are designed for college students. Most young people do not have an established credit history.

Student credit cards are designed for college students in order for them to establish good credit. For many students, the most important thing when signing up for a student credit card is knowing about credit, how a credit card works and what they are getting themselves into.

Student credit card issuers make the majority of their income from fees associated with the student credit card. Typically, student credit cards will have very low credit limits and higher interest rates than regular credit cards.

Most student credit cards offer credit limits anywhere from $300 to $1000. Student credit card issuers make money when a student cardholder goes over the credit limit and starts accumulating interest on the unpaid credit card balance.

Student credit card holders can also go over the spending limit of the credit card and end up paying over spending fees. One thing for the student credit card holder to be aware of is how much they are spending. It is very important that you tally your purchases up so that you know you are not going over your spending limit.

It is also important for the student credit card holder to pay off the balance of the credit card as soon as possible. Unpaid credit card balances will accumulate interest and you can end up paying much more than you initially borrowed.

With most student credit cards, a low interest rate is used as an introductory interest rate. Often times the introductory interest rate for a student credit card is 0%. The introductory interest rate is typically active for a short period like six or 12 months. After the introductory period has ended, the interest rate for purchases will be much higher with a student credit card.

Because most students do not have established credit histories, interest rates in student credit cards are higher than those of regular credit cards.

Interest rates can be as high as 16.99%. Interest is added to the balance of the credit card bill that is not paid in full.

As you can imagine, high interest rates can add up over time, especially if you have a higher credit limit (this is how credit card companies make money).

The 0% introductory interest rate for student credit cards is very misleading for many students who are new to credit.

Before you accept a student credit card, it is important to know what the interest rate will be after the introductory period.

Disadvantages of student credit cards:

Low credit limit. When you are applying for your first credit card and have no established credit history, you are a higher credit risk. Because you have no credit history, your credit limit on a student credit limit will be very low.
High annual percentage rates (APR). Because most students do not have established credit histories, they present a higher risk to credit card issuers. As a new credit card holder, you will be faced with higher annual percentage rates.
Having a student credit card is a great way for a student to build a credit history. Just like any other type of credit card, there are risks. Before getting a student credit card, it is important that you understand the terms and conditions of the credit card.

In addition, make sure that you understand the rates and fees associated with the student credit card before you start to use it. A student credit card used properly can be very beneficial.

The top student credit cards:
Citi® mtvU™ Platinum Select® Visa® Card for Students
Bank of America® Student Platinum Plus® Visa®
Citi® Platinum Select® Card for College Students


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