Student Credit Cards Can Help You Establish a Credit History

by : Nick Makaryk

Credit cards are somewhere between a luxury and a necessity. They do offer a lot of convenience since one never need carry cash when a credit card is at hand. Some credit cards come with a lot of regulations, but other companies will offer high school and college students credit cards in the interest of helping them to establish credit. These student credit cards do come with some strings attached, but are more or less interchangeable with a regular credit card.??

There are a lot of student credit cards which require a co-signer, such as a parent or guardian. If the student fails to make their payments, the responsibility falls upon the co-signer. In effect, the co-signer serves as collateral for the student credit card.

A student credit card will generally have a higher rate of interest (also known as APR) than would a traditional credit card. In many cases, the spending limit will be far lower, somewhere between $250-$800 on average. The limit is low since the students have not yet established a credit history and there for don't have a good credit rating. However, the cards still let students establish credit despite the low spending limits.

A student credit card can be a big help to a student who wants to make a large purchase. To do this, one would usually need good credit; but this is where the student credit card comes in handy. The student credit card can be used to establish and build good credit, making it much easier to get a more substantial loan when the time comes that one is needed.

Student credit cards are also a great way to teach students to handle their finances responsibly. The spending limit is less, but they are just like any other credit card in functionality. One the student can handle using and paying off a credit card, they will be capable of better managing all of their finances. These skills are something which will stay with them for a lifetime.

While student credit cards can be great and offer a lot to students, they still can be overused, just like any other credit cards. Students have to learn not to overspend - if they rack up more debt than they can pay, they will affect their credit rating and possibly that of their co-signer as well. Before using a credit card at all, students must learn to plan and stick to a budget.

Student credit cards however are for the most part a greatly beneficial thing. They teach responsibility to high school and college students and can be a lifesaver in case of emergencies. If you have a son or daughter in school, think about getting them a student credit card - it will establish credit for your child and teach them a lot about financial responsibility.