Comparing student credit cards
Comparing student credit cards
If you are confused about the different types of credit cards advertised to today’s student, you are not alone. Lenders are constantly coming up with different card programs for students entering high school. Here is a brief breakdown of the most popular cards and how they work.
Student Credit Card
A student credit card refers to a plastic card linked to a line of credit backed by a credit provider. The provider sets a pre-established credit limit that can then be used by the student. The credit card requires monthly payments and all money spent has to be paid back including an accrued credit card fees.
Prepaid Student Credit Card
Unlike the student credit card, prepaid cards do not come with a line of credit. Instead, the student determines how much money he or she wants to be able to spend. That money is put into an account held by the creditor. When money is spent via the card, the funds are withdrawn from the account. Prepaid cards also have interest and other related credit cards like a student credit card
Secured Student Credit Card
For students who don’t have a credit history, a secure student credit card can help change that. Through the use of secured card, the student can build a credit history so that one day a traditional credit card is obtainable. Secured student credit cards also have fees associated with them. They spend just like a regular credit card and no one can tell the difference by look at the card itself. However, the secured card is backed by funds put up by the cardholder. For example, if a student wants a secured card worth $1,000, the card company requires money be put into an account to guarantee that credit line.
Student Debit Card
Virtually the opposite of all the other student-based cards, the student debit card is simply a debit card that draws from a student’s bank account when used to purchase an item or service. The use of this card does not affect the student’s credit report in either a good or bad way.
To learn more about the proper usage of credit, visit our credit card resource blog.
Student credit cards.com @ January 4, 2008