Student Credit Cards: What Are They and How to Apply for One?

When you’re a college student, you have little to no credit history. This can pose a challenge to obtaining a traditional credit card. A student credit card can be a real asset in such a scenario.

As the name suggests, it is a financial tool designed specifically for students. It offers a viable opportunity to build your credit history early and experience responsible financial planning.

Who can apply for a student card?

A college or university student over the age of 18 years can avail of this card. Student credit cards are typically issued if you don’t have a monthly income or credit history. The eligibility criteria vary from bank to bank or credit union.

Reasons for students to get a credit card

Aside from the obvious reasons, such as building credit, a credit card comes in handy in times of financial emergency. It is also an excellent way for students to learn the responsible use of financial tools and explore rewards.

Build credit history

In today’s times, credit history and credit score play vital roles in your financial journey. Building an early credit history can do wonders for your financial health. Learning to use a credit card properly will improve your credit score, helping you secure a loan in the future. A good credit history and higher credit score also puts you in the prime position for higher credit limits on a traditional credit card.

Safety net during financial emergency

A credit card can be crucial during financial emergencies. It gives you the freedom to make critical purchases and expenditures when money is tight. However, bear in mind that repaying your credit debt during the billing cycle is imperative. Otherwise, you’ll be hit with high interest rates, negatively affecting the credit score you’re cautiously trying to build.

Earn rewards

Rewards are lucrative ways to reduce your expenses as a student. Student credit cards generally entail good rewards, like discounts, coupons, cashback, and offers to limit expenses.

Applying for a student credit card

To get a student credit card, you must fill out and submit an application form at an issuing bank. HDFC Bank, Axis Bank, ICICI Bank, and SBI are a few banks offering credit cards to students, usually with good rewards.

These are typically the documents required by the bank for availing credit cards for students:

• PAN card or other government-issued ID proof
• Aadhar card or other government-issued address proof
• Student/college ID card or any other proof of enrolment
• Birth certificate
• Passport-sized photographs (the number as stipulated by the issuing bank)

Benefits and drawbacks of a Student Credit Card

If you’re considering or on the fence about getting a credit card for students, here are some benefits and drawbacks to guide your decision.

Benefits

    1. Relaxed eligibility requirements

These cards are directed at students; getting approved is easier compared to getting a traditional credit card.

    2. Special student benefits

A world of rewards, coupons, and offers awaits you. From longer interest-free periods to higher spending rewards. And from railway booking surcharge waivers to select airport lounge access.

Drawbacks

    1. High interest rates

Certain banks may deem students as high-risk borrowers and levy high interest rates on non-payment of credit card bills.

    2. Limited benefits

Students will lose access to rewards and benefits after graduation.

    3. Tendency to over-spend

Credit cards make buying things so easy, which can lead to bad financial decisions.

Final Thoughts

Student credit cards can be excellent financial tools for building a credit history and establishing a high credit score. The important thing to remember is to use your card responsibly. Do not overspend. Pay your credit card bills on time. When used correctly, these cards can be the first step on your financial journey.