Student credit cards function nearly identically to their standard counterparts, except that applicants without a credit history can qualify for one. They have several benefits; perhaps most importantly, they allow you to start building credit at a young age. However, they also c🍒arry risks, such as saddling you with high-intꦕerest debt.

The Basics of a Student Credit Card

Student credit cards are a form of 澳洲幸运5官方开奖结果体彩网:unsecured re🐓volving credit. Unlike traditional credit cards, these ones are intended for part- or full-time students pursuing a higher education. Since it's difficult to get approved for a standard credit card without an established credit history (something younger borrowers are less likely to have), student cards waive this requirement.

Once you graduate, you may be able to transfer your student credit card account to a traditional one, potentially granting you a higher 澳洲幸运5官方开奖结果体彩网:credit limit (i.e., the maximum amount that the issuer is willing to lend you on that card). However, not all credit card issuers will offer this option; in some cases, your card𒊎 will simply close once your student status expires.

3 Reasons for Getting a Student Credit Card

Establishing Credit History

Your credit report and score play a major role in your ability to take out a mortgage to buy your first home, finance a new car, etc. While you’re in college, chances are you w❀on’t have much of a credit history (if you even have one at all). Student credit cards give you a chance to simultaneously build your credit as well as pay for living expenses not covered by student loans.

By opening a student credit card, you gain access to a line of credit, which increases your available credit (i.e., the difference between the car credit limit and the account’s outstanding balance). Once you start using your credit card and making on-time payments, you begin to establish a healthy payment history, which makes up 35% of your 澳洲幸运5官方开奖结果体彩网:FICO score.

Maintaining a low balance also reduces your 澳洲幸运5官方开奖结果体彩网:credit utilization ratio, or the percentage of your total available credit that’s being used. This figure accounts for 30% of your score.

Having Access To Credit For Emergencies

You never know when an emergency will st♕rike. While having a healthy emergency fund is typically the safer option financially, having a credit card gives you instant purchasing power if you don’t have sufficient cash to cover whatever costs might arise.

Earning Rewards for Your Purchases

Depending on the lender, a s💖tudent credit card may allow you to earn rewards in the form of cash back, airline miles, etc. So long as you’re spending responsibly and making your payments on time, you can pote♛ntially reap significant benefits at no additional cost.

However, the reason these rewards are offered is to incentivize you to use your card. It’s important not to fall into the trap of spending money you don’t have just to get more rewards. You could end up with substantial credit card debt, whi♛ch can stand in the way of your savings and investment goals.

Student Credit Card: Potential Risks

Taking on debt comes with risks, and student credit cards are no exception to this rule. These cards typically have high annual percentage rates (APRs🐭). If you don’t pay off the balance in full each month, interest will accrue on the outstanding amount, which can add up fast.

Another major risk with these cards is that they make it easier to spend, even if you don’t have sufficient funds to afford whatever you’re buying. To avoid overspending, it’s best practice to only use your credit cards for the things you 🦋actually need.

The Bottom Line

Student credit cards are a great way for young applicants to build their credit. While they carry risk, using these cards responsibly can eventually unlock access to ot💟her types of credit, such as mortgages and auto loans. If you’re current♛ly in school and have no credit history, consider checking if your local bank or credit union offers a student credit card that can get you started.