Student Credit Cards

It is never too early to start thinking about a child’s financial future.  Before a child is 16, parents can instill financial responsibility through an allowance system.  After 16, parents are often encouraged to urge their teen to get a part-time job along with opening a checking account.  But things shouldn’t end there because nowadays teens can be introduced to another side of financial responsibility: establishing a decent credit history.  This is done through the power of student credit cards.

What is a student credit card?  A student credit card is a credit card specially designed for high school or college students.  Like traditional credit cards, a student credit card charges interest, has monthly payments and spending limit, (which is usually lower than what is offered for other types of credit cards).  Unlike traditional credit cards, many student credit cards may require parents to co-sign before the teen has access to it.  Student credit cards may also charge significantly higher APRs than what is typical for other credit cards as well as have lower starting credit limits.

While student credit cards are not perfect, for young people they might be the only way credit can be established.  This is for two reasons.  Firstly, if a person is under 18 they cannot get credit on their own anyway.  Secondly, even if an individual is over 18, if they have no credit history, a credit card company is very restrictive on the terms and availability of credit.  Student credit cards allow persons in both categories a ‘safe’ way to help build their credit histories.  It is safe because if they can’t pay their credit card balance, the credit card company hopes their parents will help cover the charges or be obligated to if they had cosigned.

But hopefully, things will not get to this point.  If a teen does what they are supposed to do and make their credit card payments on time, they will have a credit history that people twice their age would envy by the time they graduate college or even high school.  Imagine, if an 18 or 21-year-old could have a credit score of 700.  They would have no problems getting an apartment, car or student loans.  And all of these things could be acquired under their name, not with their parents as co-signers.  In fact, if student credit cards are used appropriately, a young person might be able to become a homeowner before the age of 25.

So, how does a parent get the process started for obtaining a student credit card for their child?  Online is almost certainly the easiest and most efficient way to shop.  There should be no surprises when it comes time to filling out the credit card application, since applying for student credit cards is no different than applying for traditional credit cards.  If the application is approved, the teen will receive their own new credit card in the mail.  This credit card will help pave the way for a successful financial portfolio.

Student credit cards can be used to help teach teens or college students how to be financially responsible.  They can also help build credit history, something that will be invaluable as the teen or young adult goes through their life.  Choose the student credit card carefully.  Credit card interest rates on student credit cards vary greatly.  For these credit card services, the best credit card can generally be chosen on interest rate or the credit card apr.  Checking the credit card online for available interest rates and features should be the first step.  Review the short credit card application completely before submitting and start on the right path to good credit card debt management and good overall credit management.