Student Credit Cards – Merits and Demerits

By Jin Kim

Credit cards for students have both advantages and disadvantages. Parents and students should be aware of the pros and cons of student credit cards. Some of the merits and demerits of using a student credit card are discussed below.

Easy solution to cash crunch: If you are staying away from your parents or living in a boarding school or in hostel, the student credit card will be very helpful. It is an easy solution to an unexpected cash crunch and becomes invaluable in times of emergency. The credit card can make you more self-dependent and free from worry of funds. It is like all time money.

Put a limit on spending: Student credit cards generally have very low credit limits and this will place a restriction on the total spending, forcing the student to think and plan their expenses. It will make users/students understand budgeting and let them think what is necessary and how money can be spent judiciously.

Parents can monitor children’s expenditure: If the student credit card is opened on joint ownership between student and parents, the bill will come to both of them. This way parents can know what way their son/daughter is spending. If parents find any unnecessary expenses, they can guide their children accordingly. It will help both the parents and students.

Incentives: Student Credit card providers woo students with various lucrative offers like rebates, cash back etc on the things students buy most, like books, CDs and clothes. You can take advantages of these offers. Moreover, student cards usually have very low APRs and other fees.

Credit record: Student credit cards are great opportunities for students to start building a good credit history. If you use your card wisely then you will build up a credit history that will help you to secure loans and mortgages more easily in future life.

Safe shopping: A student credit card enables you to shop safely and securely online. It is easy to carry and there will be no fear of losing money or becoming a victim of theft if you carry a credit card to the market. Even if you lose your credit card somewhere, you can inform the card company immediately and that will be made invalid. Later you can ask the company to issue another card in your account.

Easy to obtain: The other advantages of student cards are that they are fairly easy to obtain. There are hundred of banks and lenders offering credit cards without any charge. Moreover, the card providers do not ask for credit history of the applicants. Simply apply and the card providers will do everything till you get the card at your place.

Credit card can put you under debt trap: If misused, the credit card can put you under debt trap. If you do not pay your balance, then you will be charged high levels of interest and quickly create debt for yourself. These rates on student credit cards are often higher than that on other credit cards, and can outweigh the discounts and benefits you get.

Over-spending: There is also the danger that you will just spend too much money, and put yourself into debt that will harm your credit rating rather than improve it. Once you come under the debt trap, it would be difficult to manage your finances and this would harm your studies as well as put an unnecessary burden on your normal personal life.

Therefore, if you think there is any chance that you will not be able to handle the responsibility associated with a credit card, then, probably a student credit card would not be the best idea for you.

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