First Credit - Student Credit Cards

Once a young person enters college, there's a whole range of new responsibilities that have to be faced. One of the most important is the art of managing often limited finances. Student credit cards are specialty cards offered to initiate young people in the use of credit. No income? No credit record? No problem! The only qualifying factor is that they an enrolled student at a four-year university.

Anyone, including high school students, can apply for one of these credit cards, but they're generally meant for college students. Although these cards may be easy to get, they typically charge heftier fees and interest rates, and smaller credit limits.

Young adults generally have no established credit history. Young people with limited experience and no established credit history are often frowned upon by credit card companies. However, those who are attending college with their focus on the future demonstrate a degree of maturity and responsibility that gives companies a bit of assurance that they will be able and willing to take care of their debts. Also, parents are often willing to come to the rescue to pay the bill, especially if they've co-signed for the credit card.

Two Types of Credit Cards

Secured Credit Cards - The student will be spending money that has been deposited in a bank account in advance. With this type of card there is no risk of accumulating long-term debt or interest. Cards are also available that allow parents to link a student's card to their personal account, or let them keep refilling the teen's or student's accounts as they go along. It will cost an enrollment or annual fee and additional fees each time money is added to the card.

Unsecured Credit Cards - This is a traditional credit card that is an actual loan from the bank. No advance deposit of funds is required. Interest is applied to the balance carried from month to month and is often substantially higher than other credit cards. This type of card is much harder to get approval than a secured credit card.

Details of the Best Offers for Students

• The lowest APR card will help when a balance must be carried from one month to the next. An interest rate in the mid-teens is reasonable for students.
• A long grace period will allow for a longer period of time before you have to pay interest.

• Look for a 'no annual fee' offer.

• Employed students are more likely to be approved, as it shows responsible behavior.
• Be truthful on your application. It will increase the probability of getting the best rates, as the company will verify all the information on your application.
• Online account access is a plus to easily keep track of balances and payments.

Using Student Credit Cards Wisely

Begin with a budget that can be easily managed each month and stick with it. Even though new credit card consumers are typically offered a limit of $500 to $1,000, limit yourself to what you can repay each month. Safer than cash, use your credit card to purchase student necessities.

Student credit cards that include rewards are available through major issuers like Citibank and Chase who has partnered with retailers like Starbucks, Amazon, and the Gap. Be careful that the rewards don't entice you to spend outside your budget just to earn the reward.