Comparing Student Credit Card Options

by Susanna Hamilton, Contributing Editor on July 25, 2012

College Credit CardsAlthough at one time students could receive credit cards without demonstrating the ability to pay back the loans, Federal credit laws have since limited credit card companies in issuing cards to individuals under 21 years of age.

In most cases, if the student does not have a job with sufficient income to make the payments on their credit cards, then the card application will need to be co-signed by a parent.

The alternatives for students desiring a credit card would be:

1) To apply for a secured credit card or prepaid card.

2) Have an additional card issued in the student’s name on one of their parents’ existing credit card accounts.

Keep in mind, being an authorized user on their parents’ account or using a prepaid card would not help the student to begin building their own credit profile.

Advantages to Parents and Students:

If parents are signatories on a student credit card account they will be able to dictate the credit limit for their student’s credit card. For students, credit limits of $1000 or less are normally considered. Since, in most cases, parents may receive or have access to a copy of the credit card statement they will also be able to monitor the student’s spending habits.

Having a credit card can teach students how to handle credit responsibly when they have to pay their own bills. It also helps students establish a credit rating so when they become independent they will be able to qualify for auto loans and home mortgage loans.

The Benefits of Student Credit Cards:

College students often have unforeseen expenses for books and materials that may not have been included in initial class requirements. Having a credit card allows students to purchase the items they need and saves parents the expense and hassle of wiring emergency funds to their student as needed. Credit cards are safer than cash; if a credit card is stolen and used fraudulently the credit card holder is normally not responsible for any fraudulent charges. If cash is stolen it is just gone forever.

Reviewing Student Credit Card Offers:

Most major credit card companies offer student credit cards with special incentives. While the incentives may be attractive, it is important to choose a card that allows parents to exercise some control over student spending. Some student credit cards may state no cosigner is required, but students who do not have an independent income will still need a cosigner under Federal law.

What to Look for in Student Credit Cards:

If a parent is cosigning a credit card, it is important that he or she be aware of the student’s spending. Be sure to look for cards that notify parents of major purchases.

Since many students live in dormitories where theft may be a problem, cards with $0 fraud liability are good choices.

Offers with no annual fees and low APRs may be a better choice for students than those which offer cash back or other incentives for new customers.

Parents should review student credit card offers before choosing a card that will meet their needs and the needs of their teenager. Student credit cards offer advantages to students and parents as well, and can help students to begin building a credit score for their future.

Taking this opportunity to learn to use credit wisely is a skill that will help students throughout their lives.


Article Courtesy of Credit Card Approval Center

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