Perks and Pitfalls of Using a Student Credit Card

Living away from home, while working toward a college education, can be a stressful juggling act. Everyday living expenses, emergencies and unexpected necessities would require a great deal of cash on hand. However, students have another option - a student credit card. With a student credit card, a student can make those necessary purchases, such as textbooks, groceries and transportation expenses, at a moment's notice. In case of an emergency, for example a medical need or car repair, a student credit card allows for an immediate solution. Widely accepted worldwide at ATMs, restaurants, hotels and for booking train or plane tickets, student credit cards make getting from place to place easier. Just like an ordinary credit card, a student fills out an application and upon approval has access to a determined credit limit. College students have the envious position of lenders approving their applications with limited or no credit history. Thus, college student credit card has a spending limit that is lower than other credit cards, typically less than $800.Many students are first time applicants and will require a co-signer that will act as a guarantor for the college student's credit account. In the event that the student is unable to make the payments on the account, the co-signer will be approached to settle the debt obligation. Another safeguard for new credit card users would be to consider a prepaid student credit card. This type of card works more like a debit card, in that the funds must be maintained in a secure bank account. So when the balance is $300, you will have a spending limit of $300. But unlike a debit card, the student will earn positive marks on their credit history, ultimately raising their credit score which opens up more opportunities for future credit approvals, like for a car loan. A prepaid student credit card poses no financial risk to the student; yet using one will still teach the student the fundamentals of money management and building a good credit rating.Student credit cards help young people by:• Helping them establish a good credit history • Encouraging responsible money management • Making future credit applications easier to qualifyCompare student credit card offers online, including the APR, transfer and cash advance fees and penalties on late payments, before applying.