Student Credit Cards
What are student credit cards?
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Student credit cards represent both risk and opportunity for credit card companies. On the one hand students don't have much money; so lending money to them could prove unwise. On the other hand; once they graduate the likelihood is that they will be earning good salaries. Therefore the odds are that they will repay their borrowed money and continue to use plastic. The other major factor in the banks' favour is that the majority of people don't switch banks, so it's important to win custom as soon as possible. Student credit cards allow banks to establish a credit relationship early on that they hope will last a lifetime.
It is worth asking yourself a few questions before deciding whether to take out a student credit card or not. The first thing you should address is whether or not you can afford it. Credit cards represent debt (unfortunately, there really is no such thing as a free lunch) which you'll have to add to tuition fees, student loans and overdrafts. In the 'best-case' scenario you will have to make minimum payments every month and it's a good idea to aim to clear you balance to avoid mounting costs. Many students run into financial problems at university and some are forced to leave because of debt problems. Don't be one of them.
Another important thing to remember is that if you fail to make payments (or run into difficulty) you will build up a bad credit history. Your credit history will become important later in life when you want to take out mortgages and other loans and should you get 'blacklisted' at college; you'll face serious problems once you graduate. Good money management involves taking a long hard look at your outgoings and spending some time exploring all the possible options.
Once you've made the decision to take out a credit card, you'll then have to turn your mind to choosing the right one. All the major high street banks offer student credit cards so have a good look around. Keep an eye open for some of 'student plastic pitfalls' which typically include: high APRs (particularly on cash advances) and a noticeable absence of many of the 'perks' associated with 'normal' credit cards such as loyalty schemes, Cashback options and travel assistance. Many student credit cards offer discounts at bookshops or other one-off freebies (such as a bottle of champagne or gift vouchers), but the chances are you will re-pay this many times over once you take out the card.
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