Student Credit Card vs Regular Credit Card: What's The Difference?
What is the difference between a student credit card and a standard credit card? Not much! In fact, the only real difference between a student credit card and a regular credit card is that student credit cards have higher interest rates (i.e. the annual percentage rate or "APR") associated with them. This is to be expected since issuing a credit card to a young person with little or no credit history translates to increased risk for the credit card company. Also, with student credit cards, you may be required to provide the name of your college or university on the credit card application form.
Student Credit Cards Advantages:
- Emergencies: In a college atmosphere, an emergency can happen when you least expect it. Having a student credit card handy can really be a real life saver for emergencies like disabled vehicles or needing some cash for that taxi ride home from a party.
- Learn About Credit: A crucial life lesson which can have a huge impact on a person's overall quality of life. A student credit card is a big responsibility, and if a student can learn to handle one responsibly, it can give parents great comfort in the knowledge that their child is ready for the real world of money and finance.
- Track Spending: Students can effectively track their spending by reviewing and storing the monthly credit card statements that will be sent by the credit card company. This will help students understand the importance of budgeting and record keeping.
- Reduce Cash Worries: A source of a little extra peace of mind: carrying around a student credit card means that you don't have to carry too much cash in your wallet or purse.
Student Credit Cards: The Drawbacks
- High Interest Charges: The interest charges on outstanding balances are invariably higher with student credit cards due to the increased risk for the credit card company. And the interest rate on a student credit card can soar to over twenty-five percent (25%) if you miss a payment. Establishing a credit history will require some compromise, but you can always cancel a student credit card once you've graduated; the credit history you will have developed will enable you to get a standard credit card with a much better interest rate (APR.)
- Easy to Get Carried Away: Most working adults understand how easy it is to get carried away with credit cards and quickly end up with a mountain of debt. Most students, on the other hand, don't realize how easy it is to get carried away with spending, and often end getting into serious debt problems, problem that can sometimes lead to leaving school before earning a degree. Understand that using a credit card is the same a spending cash; it's a loan from the credit card company that you have to pay back. Use your student credit card wisely and sparingly. Only buy goods and services that you can realistically afford.