The Power Of A Student Credit Card

Even high school and college students now have options allowing them to acquire a credit card. A student credit card is one of these options and it will be explored in this short article.

Student credit cards are pretty much used the same way as any other credit card but as the name implies are designed for high school and college students and often come with restrictions and limitations not normally placed on other cards. A company issuing a student credit card will ask for a co-signer as a means of insurance or for credit protection, takes on the responsibility of covering any debts that the student may incur that they are unable to pay should they choose not to send a payment in for their credit card balance. The co-signer is a back up source of payment that the credit card company can utilize or hold accountable should the student fail to make their credit card payment.

The interest rate is higher on a student credit card when compared to traditional cards thereby minimizing the financial risk to the company. The spending limit on a student credit card is usually between $300 and $750. This is due primarily to the fact that many of the students that obtain these cards do not yet have an established credit rating and most likely aren’t working high salary jobs. There are other reasons why student credit cards can be beneficial for the individual using them.

As you can expect a good credit rating can be a big step toward financial independence and student credit cards are a good stepping-stone to achieving that good credit score. The chances of being approved for a future loan are greatly improved if your credit rating is high. This is a very important and necessary financial skill. There are dangers as well. If a young person is aware of these dangers. The best protection a student can have to avoid overspending is to create a budget.