What are school credit cards for?

school credit cardSchool credit cards are mainly for students attending a college or university and used mostly for school expenses, although many students use them for other expenses as well. Although school and student credit cards are used similarly to a regular credit card, there are some distinct differences.

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There are different eligibility requirements for student credit cards and they are not for everyone. It is important to understand how credit cards work and how to be financially responsible in order to avoid future problems and debt.

Who is eligible for school credit cards?

School credit cards are generally for students 18 years or older. This limits the cards to college students and maybe the occasional high school student. In the past, credit card companies would inundate students’ mailboxes with first credit card applications and would approve almost anyone. This led to problems all around.

To decrease the chances of credit card irresponsibility, new laws have restricted who can apply for and get a student credit card.

Card companies are no longer able to directly mail a student an application for a credit card. There are also restrictions for students under the age of 21.

If you are a student under the age of 21 and would like to be approved for a credit card, there is one of two things that must happen. You either need to have an adult credit card joint account holder or co-signer, usually a guardian or parent, or you need to provide proof of income that is high enough to warrant credit card approval. Some companies require both.

If you are 21 years or older, you usually don’t need to have a co-signer or income proof. You do, however, usually need to have a credit history of some kind. If you do not, you may be required to have a cosigner.

How are school credit cards different from regular credit cards?

school credit cardsDepending on the credit card company, there are some differences between a credit card for students and one for working adults. The biggest difference is the credit limit applied to the card. A credit limit on a school card will be much lower than the limit on a regular credit card. This helps prevent students from building up a lot of debt.

If you get a credit card that is affiliated with your school, the use of your card may benefit both you and the school. Some schools will offer certain discounts and promotions if you use your credit card on school-related items. Some credit card companies will give a percentage of what you spend back to the school.

How are school credit cards dangerous?

Credit cards for college students are dangerous when proper card usage is not followed. If you have not learned how to budget and you are not self-disciplined, you may find yourself owing a lot of money that you can’t afford.

Before applying for a student credit card, you should take a class on responsible credit card use. You may even want to set up a complimentary session through the Consumer Credit Counseling Service.

Even before you are old enough to apply for a credit card, you may choose to participate in a young adult financial education program. An example of one is offered through the My Money website.

Credit cards can be dangerous for college students in that when you use them it doesn’t seem like you are spending money.

This can cause your balance to rise quickly and when your bill comes, you may experience sticker shock. If you don’t have enough money to pay the balance, you may start resorting to paying just the minimum and this starts a downward spiral. After months of use, you may find yourself panicking with the amount of debt you have acquired. This can also negatively affect your credit score.

What are some alternatives to school credit cards?

If you are unable to get a co-signer for a student credit card or you don’t want to risk debt by credit card use, there are some alternatives. These include secured credit cards and prepaid cards.

A secured credit card can be secured by your funds in an account, usually your savings account. A prepaid card is just like it sounds, you put a certain amount of money on the card and once you have used the money up you can’t use it again until you load it up.

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