How to Choose the Best Student Credit Cards

Having a Student Credit Card Can be Useful if Used Sensibly

Aug 31, 2009 Carol Finch

Students are always short of cash and having a student credit card can be a useful fall-back for emergency costs. Choosing the right card and using it sensibly is vital.

Leaving home to go to college may be an exciting time but it can also be confusing. Many students are not yet used to managing their own finances and may feel overwhelmed by the offers they are given for bank accounts and student credit cards. Although most will know that they need to minimise their student debts to give them the best start once they graduate and start work, many will also get into financial difficulties during their time at college. For many students, these problems start from day one when they take out a student credit card offer. The problem here is that many simply do not know how to pick the best student credit cards and how to use them.

How to Pick the Best Student Credit Cards

Many credit card providers will target students with glitzy offers and deals that make their cards look attractive. Whilst there is nothing wrong with choosing a card based on a deal, this shouldn't be the only consideration. Most students would be wise to take some time to look behind student credit card offers to see how the base structure of the card and its charges will impact on their finances. Good things to look for include:

Low interest rates – there will often be times when students cannot pay off their credit card balance in full and they will then be charged interest on the money that they owe. The lower the interest rate given, the less they will have to pay in these interest charges. Using an online credit card rate comparison tool can help students find the best deals.
No card fees – it is wise to look for a student credit card that comes without an annual fee. Many card companies won't charge a fee for this type of card, but some will try to.
Low credit limits – many students are dazzled by the amount of money that a credit card company will give them as their credit limit. It's actually a better idea to go for cards with lower credit limits to discourage spending.

Although having a student credit card can be useful, especially in emergency situations, it is wise to realise that the money given here as a credit limit is borrowed money. As such, it will come with a cost. Many students will find, therefore, that they manage their credit cards better and avoid getting into problems with debt by thinking about how, when and why they will use their cards.

How to Use Student Credit Cards Sensibly

Successful credit card management for students really is a question of understanding the pitfalls of using this kind of line of credit and trying to avoid them. Good tips include:

Understand from day one that the money that is available here is a loan and any spending could incur interest charges.
Try not to use student credit cards for everyday spending and keep them for emergencies.
Try to pay off any spending on a card as soon as it is due – if this is not possible then try to make more than the minimum repayment wherever possible.
Don't accept automatic credit limit increases given by the card company – keep limits low and arrange for them to be put down again if the card company increases them automatically.
Don't be tempted to take out multiple student credit cards just because they are on offer.
Don't use a student credit card to get cash advances from a cashpoint – this will come with higher interest charges and can take longer to pay off.

Following these kinds of tips can make it easier for students to choose the best student credit cards and to use them correctly. Making sure to budget and spend wisely could also be a useful money management habit to get into at this stage.

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