Currently, average rates for college student credit cards here at the first of June are around 13%, but many advertised cards also stated that rates could be as high as 22% or more, but many students have been looking into these credit card opportunities simply as a way to begin the process of building their credit score while in school, which can benefit later in life or in some cases, while they are still pursuing their education. Obviously, students will have to be aware of the fact that CARD Act provisions may require that they provide proof of sufficient income before acquiring a card or have a cosigner, like a parent, before certain credit card opportunities may be available, but the reason behind getting a credit card for a college student is what should be considered before a credit card option is selected.
Credit card companies have often given incentives and perks to cardholders who sign up for new accounts, but again, CARD Act rules will no longer allow certain types of gifts or incentives to be offered on campus when students encounter opportunities. Yet, incentives or gifts should not be the reason for college students acquiring a line of credit, as credit card use early in life can be incredibly beneficial or it can wreak havoc later as someone who begins their credit life early in a negative position will likely struggle for years down the road rather than simply seeing more affordability in various areas.
As an example, many college students will often find that as they near the conclusion of their academic career they may be in a position to live off campus, and if a part-time job or internship is available, many students will work, attend classes, and live on their own in an apartment, which can make transitioning out of school much easier when graduation does arrive. However, students who have a low credit score often, once again, need a cosigner or may have to meet a higher cost, like those related to security deposits, if they do not have a credit history or score. While using a student credit card will not automatically put a student in an advantageous position in terms of their financial life, it can show potential lenders or even rental offices that a student does have financial responsibility and could pose less of a risk, which may lead to lower fees or the chance to avoid needing a cosigner.
However, students must be aware that student credit cards often comes with a higher rate simply because there is little credit history which a lender can go by as to whether this particular cardholder will be a responsible card user. For that reason, students must understand that making affordable purchases on their credit card and quickly paying them off will typically work best simply because interest rates will not cause overall costs increase, and in the majority of cases, it is these additional costs that get many students in trouble as some will simply only pay the minimum payment on their credit card, continue to spend, but are simply not in a position where their income affords them the ability to pay what they owe. Caution is to be taken when any student credit card is considered, as there are some benefits which can be gained, but again, irresponsible use will lead to problems early on in a student’s life and this could bleed into other areas even after graduation and put a student at a financial disadvantage after graduation.