Student credit cards often offer a person their first credit card experiences. Such
cards are designed to help young people cope with the daily expenses of their high school
and college years. Credit histories often start with student credit cards, so diligently
responsible use is very important. Future borrowing power, and the ability to get certain
jobs, insurance, and housing all depend on a good credit history.
Youth-oriented and educational incentives are offered, and eligibility requirements are
often altered to fit the circumstance. An applicant may have to prove enrollment at an
accredited college or university. Annual fees are low or often waived entirely. The annual
percentage rate of interest is conservatively high, typical of cardholders with little or
no credit history. Sometimes a co-signer is required in lieu of offering income information
or having an existing credit history. Default of the student credit card's usage guidelines
may result in immediate suspension of the card.
Typical incentives for student credit cards include cash back rebates for purchases of
groceries, gas, travel expenses, clothing, restaurants, utilities, and even a car. Reward
points are often offered for purchases, and might even be earned by maintaining a good
Grade Point Average. Redemption of reward points might be for books, music media, movies
and concerts, gifts, and airfares.
Early payments might earn a discounted interest rate. Interest may be waived during the
first several months of use, or for balance transfers. Online account management is
typical. Fraud liability may be waived. A choice of youth-oriented card designs might be
offered.
For students who cannot qualify for a credit card, there are prepaid debit cards available.
These handle much the same as credit cards at the point of purchase, but instead of
creating a debt that must be paid at a later date - often with interest - the debit charge
is deducted from an existing account of money. Effectively, this is like a checking account
with the ease of credit card use. Students with bad or no credit history, no cosigner, and
no employment can obtain debit cards. There is usually no minimum balance required, a very
high maximum limit, free money transfers. There is often a free account alert system, free
extra cards for family members, and free direct deposit of paychecks. Reward points can be
earned similar to credit cards. Statements can be accessed at any time online.
