While many students are considering all the adventures and academic challenges awaiting them within the ivied halls of higher learning, there are also the financial aspects of furthering their education that are just as important as maintaining a good GPA. One of the key items to consider packing off to college with them is a student credit card. Credit cards for students offer a variety of benefits and conveniences (Read: 3 Ways to Really Enjoy Your Rewards Credit Card). The primary benefit is of course to begin the vital process of building a credit history for the long haul, when decisions like buying their first car or their first home become just as important as having that degree.
The Benefits and Rewards
Students in college generally have little or no credit history, therefore it is a wise move to not only take the steps to initiate this process, but do so in a manner that best satisfies their budgetary needs. Beyond the many varieties of student credit cards, there are also those that provide quite a few incentives and rewards for their particular lifestyles. These include cash back rewards, airline miles, gasoline credit, movie discounts, and even hotel discounts, or discounts at their favorite retail stores.
The various rewards and promotional incentives can range from 1% to as high as 5% for certain types of purchases. There are even student credit cards that offer rewards or points for keeping up a good GPA, as well as timely repayment behavior. These can be redeemed for plane tickets or cash back as previously mentioned, but also concert tickets, gift cards, and so on. Most student credit cards also offer a 0% introductory interest rate for a certain period, usually for six months. Depending on the credit card issuing company or lending institution, the rate offered may only apply only to purchases, while others may offer this benefit in addition to balance transfers and cash advances with the 0% introductory APR applied to all three. It should also be stated that student credit cards also offer numerous benefits if the balances are paid off each month, bearing in mind that these cards should not be utilized as a supplement to a student loan. Simply put, when the introductory interest rate offer expires, the 0% on the purchases goes up to a minimum of 12.99% and higher
Use Credit Wisely and Well
While the benefits and rewards may be both considerable and attractive, it is wise for the student not to get side-tracked by the benefits alone when deciding which student credit card to consider. Besides managing the credit sensibly, there are also a few more important considerations to review as well. These include finding out what the APR will be after the introductory rate expires, the annual or ‘maintenance’ fees for using the card, fees for balance transfers, as well as determining a monthly budget for repaying the balances in full and on time.
Compared to establishing a good credit history by using the student credit card wisely, the rewards that go along with it become secondary in significance. In short, managing the credit is extremely important, since the repayment of the obligations in a timely manner is what a good credit rating is all about. Long after the degree is well in hand, the credit score stays with the student for life. A good rating enables their future ability to invest in their own business, raise a family, buy a home or car, and anything else having good credit allows in financial endeavors throughout life after college. In addition, a student’s credit history, established by the use of a student credit card, will one day be linked to the loan rates they apply for in the years to come, as well as affect the decisions made by prospective employers and even insurance companies.
Credit card companies, specifically those that offer student credit cards, offer these cards for a few good reasons, primarily because students are a unique brand of consumer. They are beginning their journey toward financial independence and responsibility, and with a blank canvas – no red flags or blemishes. Banks and lending institutions have a lot to gain by beginning a good relationship with students for the long haul – their future lending, investment, credit and retirement needs. That is the best reason to acquire a student credit card for the challenges ahead. If used correctly, it creates the economic opportunities to fully enjoy the benefits of a good education once the diploma is framed, and finally on the wall.