Most high school and college students will find it difficult, if not impossible, to be approved for a standard credit card. Fortunately, there’s another option. Students can apply for a student credit card, which is not only easier to get, but can help them start building a credit history.
For the most part, a student credit card is just like a standard credit card. But, because this is the students first chance to prove they can be financially responsible, a student credit card might come with added restrictions and limitations.
A Student Credit Card Will Have a Lower Credit Limit
A lower limit is the providers attempt to prevent misuse and abuse. Until the student can show that they can be responsible, and will actually repay the amount they’ve charged on their credit card, the provider will try to limit the amount they could potentially lose if the balance is never repaid.
Usually, the limit on a student credit card is between $500 and $1000. Once students have shown that they can be responsible in paying their bills on time, the limit might be raised.
A Student Credit Card Will Have a Higher Interest Rate
This is another way providers try to limit potential losses. The theory is that, since most students don’t have a proven track record of paying their bills, there’s a higher probability that many of them won’t, which could mean a financial loss to the provider.
By charging a higher interest rate on every student credit card they issue, the provider is, in a way, making up for the money they could lose on those who might never pay off their credit card balance.
You Might Need a Co-Signer on Your Student Credit Card
This is another form of insurance for providers. A co-signer is someone who agrees to be responsible for the balance on your student credit card if, for any reason, you are unable to pay it yourself.
The co-signer on a student credit card is usually a parent or guardian. And, as the co-signer, they will have control over whether or not the limit will be raised.
While there are some restrictions and limitations on a student credit card, getting one can be the first step to building a good credit history. It can also be a great help in easing the financial struggles many students face, especially when they first get to college.
Beware of Credit Card Company Offers
How many of you have seen the commercials on TV that your Credit Card Company is here to help you? Bottom line is they are not, they are here to make money and they do that by getting you to pay outrageous interest rates and fees. These commercials make companies like Capitol One Visa and Continental Finance Master Card, sound like your beloved mother who knows how bad things are and will help you thru all the tough times.
The scams these companies use include setup fees, purchase fees, program participation fees, authorized user fee’s and the list goes on. There is nothing helpful or friendly about these sharks, they want your money even when you dint have it, if your late on a payment by minutes here come more fees and they are always happy to tack on more fees, like $4 to pay your bill on the internet or $25 to increase your card limit.
Their customer service is designed to harass and to confuse and if they make a mistake they dont care they will simply report it on your credit and could care less is you file suit they wont answer it, so you get a judgment against them, the big three credit reporting agency’s wont accept a court judgment as proof of a bogus debt.
The system is broken and it wont be fixed by a consumer group or any simple act of Congress, these vultures have lawyers that live to lobby and help write laws, they will spend millions on lobbyist to ensure the language of the law favors them. Its really nice that the credit industry has gotten so much attention because of how crooked they really are but if anyone thinks this is going to change then you really are out of it.