Money is an important consideration for any international student abroad. Having enough funds to support yourself, especially in an emergency, is essential. You may have toyed with the idea of getting a student credit cardwhich is particularly useful for buying textbooks or covering unexpected expenses.
There are a lot of pros and cons to getting a student credit card, including to help you establish your credit history. In the United States and many other countries, your credit history can affect your life after college, from your ability to rent to your employability, but there are caveats. If you’re considering applying for one, learn the pros and cons of a student credit card before you get started:
Benefits of getting a student credit card
1: Lower spending limit
Although a student credit card works like any other credit card, the main difference is that it has a lower credit limit. The bank or card issuer usually decides the limit, looking at the applicant’s monthly income, expenses and current debt, if any. This spending limit is handy for controlling how much you spend.
2: Establish your credit score
Every time you slipr student credit card, this “activity” will be reported to the major credit bureaus. This is not necessarily a bad thing as your expenses will be compiled into a credit report which will determine your credit score. Having a good credit rating indicates your sense of financial responsibility to potential lenders (eg, a future homeowner). This makes it easier for you to get a loan for major purchases, like a car or a house, or even to rent property.
Part of building a good credit rating is paying your bills on time and using credit responsibly. Conversely, missing your monthly payment payments and running huge credit bills will negatively affect your credit score. In the United States, credit scores range from 300 to 850 – a good score hovers around 670, according to Fair Isaac Corporation, founder of the FICO score.
3: Emergency fund
A broken laptop? An emergency trip to the hospital? A car accident? A student credit card can be useful for any emergency expenses you may encounter, so it’s always close at hand.
4: Card benefits
Many credit cards include rewards such as cash back or travel miles. Your student credit card may also come with similar benefits or rewards, depending on the card issuer.
Disadvantages of getting a student credit card
1: High interest
Student credit cards tend to have higher interest rates, with some charging 20% or more. If you pay your bill on time, you won’t have to worry. if you don’t, prepare to pay high interest rates!
2: Low credit limit
Student credit cards generally have low limits, which means they’re not always helpful if you find yourself in an emergency situation that requires a higher credit limit on your credit card. Think about why you’ll need the card and whether having a card is worth the annual fee (if any). This brings us to our next point:
3: Various credit card fees
Keep in mind that student credit cards may come with various fees such as annual fees, foreign transaction fees, and late payment penalties. However, you can get around this by doing your homework and finding a cheaper card that’s right for you.
4: Not maintaining a good credit rating
As mentioned earlier, not controlling your spending and not paying your bills on time will negatively affect your credit score. If possible, pay the entire bill instead of making minimum payments.
What to know about student credit cards in the United States
Now that you know what a student credit card entails, here are some (general) criteria for applying:
- 18 and over
- Be a US citizen or have a social security number
- Enrolled full-time or part-time in an eligible school
- Show proof of income or have someone to co-sign The app
- Have good credit
According to NerdWallet, here are some student credit cards worth checking out.