Most students have mixed feelings about credit cards because they are a double-edged sword. They can be assets to earn your travel rewards and cash backs and also build your credit. On the other hand, credit cards can be the cause of several financial headaches. It all depends on how you use the credit card.
You need to know how to use them correctly for you to enjoy them. You should also be aware that during your usage, it builds credit history. So keep in mind that your current activities will impact your ability to access money in the future.
So, there are a few advantages of student credit cards according to mypaperdone.com experts:
- Earn rewards
With a student credit card, you stand to enjoy travel rewards and cash backs. They make it convenient for you to travel and spend on things you couldn’t afford.
- Build credit
A good credit score will enable you access services such as getting a cell phone plan, opening a utility account, and renting an apartment. Your credit score will determine how much loan you get and the amount of interest you’ll need to pay. You can even miss a job opportunity because of a poor credit score. The earlier you get a credit card, the better, because the longer your credit card is active, the higher your score grows.
- Consumer protection
A credit card offers you more protection compared to cash, checkbooks, and debit cards. For instance, your debit card is vulnerable to theft, and with the right information, you can lose all your money. If you lose your credit card and someone uses it, it is possible to remove the charges. Also, with credit cards, you can get a refund for overcharged goods.
Limitations of student credit cards
- You can get into huge debt
It is easier for a student to get into debt since their income is not sufficient. Also, with minimum repayment, it could take you ages to clear your debts.
- It might ruin your credit score
When you get into debt, it implies that you are not able to pay your bill. Late payments will also result in your credit score dropping. The good thing is that if you partially pay your debt or pay it in full, you can regain your credit score immediately.
When should you open your credit card?
With the uncertainty of the economy currently, it is not a bad idea to have a student credit card only if you are sure you’ll be able to pay your balance each month. If you are looking to source for extra cash, let the student credit card be among the last options.
Regulations to student credit cards
In a bid to clear the credit card mess that students used to get themselves into, new policies are in place to regulate the issuance of student credit cards. They include:
- Any person under 21 years must show that they are capable of paying the credit card bill.
- Companies offering credit cards should not use tokens to entice students into taking credit cards.
The rules reduced the number of students taking credit cards, thus reduced the number of defaults.
As you consider getting yourself a student credit card, ensure that you have a source of income that will help you pay the bills. Missing payments will be detrimental to your credit score and will automatically hurt your future ventures. A great way to establish a good credit history is to be an authorized user using your guardian’s bank accounts. Finally, to be successful in owning a student credit card, you need to have a job, be responsible, and have discipline.