College students often must navigate a tight budget and make financial decisions that will affect their future. One of the biggest decisions that college students face is whether or not to get a credit card. While credit cards can be a helpful tool for building credit and managing expenses, they also come with risks and responsibilities.
Are credit cards good for students
Credit cards can be a useful tool for college students, but they also come with risks and responsibilities.
Pros of credit cards for students:
- Building credit: Using a credit card responsibly and making payments on time can help students establish a positive credit history and improve their credit score.
- Managing expenses: Credit cards allow students to make purchases and pay for them later, which can be useful in situations where they need to make an unexpected purchase or have a temporary cash flow issue.
- Rewards and benefits: Some credit cards offer rewards and benefits such as cashback, travel points, or discounts on certain purchases.
Cons of credit cards for students:
- High interest rates: The average credit card interest rate is around 18% APR, which means that students who carry a balance on their credit card will be charged a significant amount of interest each month.
- Risk of debt: It's easy for students to overspend and rack up a large amount of debt if they are not careful.
- Fraud: Students are at a higher risk of fraud as they may not be aware of potential scams and how to protect their personal information.
Can Anyone use Student Credit Card to build Credit History?
Student credit cards are specifically designed for college students, but that does not mean that only college students can apply for them. Anyone can apply for a student credit card, regardless of whether they are currently enrolled in college or not.
However, it's worth noting that student credit cards may have different terms and conditions compared to other types of credit cards. For example, student credit cards may have lower credit limits, higher interest rates, or fewer rewards and benefits. Additionally, some issuers may require proof of student status, such as a student ID or a letter from the college or university, to qualify for the card.
That being said, it's important to note that even if you don't qualify as a student, you may still be eligible for a regular credit card that better suits your needs. It's always a good idea to compare different credit cards and their features to find the one that best fits your financial situation.
Student credit card with cosigner
A credit card for a student with a cosigner is a type of credit card that requires a cosigner, usually a parent or guardian, to co-sign the application and take joint responsibility for the credit card account. This type of credit card can help students who have little or no credit history to be approved for a credit card, as the cosigner's credit history and income are also considered.
The cosigner on a student credit card is responsible for making payments if the student is unable to do so and they can also monitor the student's spending and usage of the card. It's important to note that the student will be the primary cardholder and they will be responsible for all the usage of the card.
Student credit cards with cosigner usually have the same terms and conditions as regular credit cards, but they may have lower credit limits and higher interest rates. It's important for the student and the cosigner to read the terms and conditions carefully and understand the responsibilities of each party before applying for the credit card.
It's also worth noting that some issuers may require proof of student status, such as a student ID or a letter from the college or university, to qualify for the card. Additionally, the cosigner should have a good credit score and a stable income to be approved for the card.
Which credit card is best for student loans?
There are several credit cards that offer rewards or benefits for student loan payments, but the best credit card for student loans will depend on an individual's specific needs and spending habits. Here are a few options to consider:
- Discover it® Student Cash Back: This card offers 5% cashback on categories that change every quarter, like gas stations, groceries and more, up to the quarterly maximum when you sign up. It also offers 1% cashback on all other purchases, and it has no annual fee.
- Journey Student Rewards from Capital One: This card offers 1% cashback on all purchases and a 25% bonus on the cash back you earn each month you pay on time. It also has no annual fee.
- Citi Rewards+ Student Card: This card offers 2 points per dollar spent on supermarkets and gas stations for the first $6,000 per year and then 1 point per dollar spent. It also offers 1 point per dollar spent on all other purchases. It has no annual fee.
- Wells Fargo Cash Back College Card: This card offers 3% cash back on gas, grocery, and drugstore purchases for the first 6 months, then 1% cash back. It also offers cash back rewards for other purchases.
It's important to note that these rewards or cashback credit cards are not specifically tailored to student loan payments, but rather offer rewards on everyday spending. It's always a good idea to compare different credit cards and their features to find the one that best fits your financial situation and look out for fees and interest rates. Additionally, you should check with your student loan provider to see if they offer any discounts or benefits for using a specific credit card to make payments on your student loans.
In conclusion, credit cards can be a useful tool for students if they are used responsibly. However, it's important for students to weigh the pros and cons before getting a credit card and to use it responsibly by paying off their balance in full each month to avoid high interest charges. Additionally, students should always choose a card with a low interest rate, no annual fee, and with a reward program that matches their spending habits.
