There are so many things to be afraid of when it comes to getting a credit card as a student. Creditors are known to prey on incoming college freshmen by mailing pre-approved cards. Unsuspecting students may assume that these cards provide the regular benefits of typical credit cards. Others have never taken out a line of credit and don’t yet understand the ins and outs of paying the money back in a timely manner.
There is no problem with college students taking out lines of credit. Expenses that come up during college are sometimes unexpected. It’s good to have a credit card around in case you need access to money in an emergency. It’s also a good idea to start building up a good credit score early-on and taking out a student credit card is a great way to do that.
The overwhelming problem with student credit cards often has to do with the lender. Many ‘deals’ proposed to student borrowers are shady and designed to mislead students into signing up for cards and making purchases that they are not prepared to handle.
These cards often come with easy spending deals that look great on the surface but quickly change to extremely high interest rates, where the students end up paying much more than they originally borrowed for the purchase. Or worse, they end up not being able to pay the sum back altogether, ruining their credit, and possibly getting the bill sent to collections. If this happens, the credit card companies simply write the cost off in their taxes, while the students deal with a huge scar on their credit report for up to seven years.
That’s why it’s important to make sure to sign up for a credit card that has the student’s best interests in mind.
The card should have no hidden fees and a reasonable interest rate. It should also have a very low credit limit, so students cannot continue to borrow into the thousands of dollars.
An example of this type of card is the SAFE Credit Union Student VISA Card. Here are some of the benefits, which are great things to look for in any student card:
This card offers a maximum $500 credit limit, which is very modest and an appropriate amount for a first card.
There is no annual fee.
A parent or guardian can be required to co-sign for the card, offering the student further protection.
Students can still apply and become approved, even without a credit history.
There is a 25-day grace period after all purchases.
There is no fee for cash withdrawals if done through SAFE online banking or ATMs.
You can bank with the program and use the credit card as a form of overdraft protection.
There are built in safeguards against unauthorized transactions, in case a card gets stolen or hacked.
You can compare credit cards online here.
Stella Walker is a writer for creditscore.net and an avid researcher of credit and insurance news. She is especially passionate about protecting consumers from credit card scams and helping students protect good credit standing.