A Student Credit Card Defined

A Student Credit Card Defined

If you are a high school student, or even college student, you may be receiving numerous student credit card applications, but not completely understand what they are for. Student credit cards applications are often extended to high school seniors and college students of all levels.

In short, a student credit card is an extension of credit that comes in the form of a plastic card. The card can be used just about anywhere in the world to pay for goods and services. It is basically a line of credit that has to be paid back in full with interest added to it. Student credit cards generally feature a higher interest rate then say a bank loan, so it is a good idea to pay off the balance each month, on time, or pay dearly for not doing so.

Credit limits for college student credit cards are based on a variety of factors including credit history and credit score, personal income, and other bank account balances. The higher your credit score and income, the better odds you have of garnering a high credit card limit. Keep in mind that if you have a short credit history, your score may be low even if your history only reflects positive credit decisions. This is because the agency needs more of a history to go on to better determine an appropriate score. If you do not qualify for a high limit, student credit card companies tend to raise limits after the borrower makes consistent payments and maintains a low balance.

There will be times when you see student credit cards offering “card rewards.” These rewards can be used in various ways, depending on the program. Some rewards offer airline miles and other offer points that you can use to purchase gifts from a magazine. Beware, however, because these cards may also charge high interest rates to cover expenses incurred with the rewards program.

To learn more about the proper usage of credit, visit our credit card resource blog.