One of the realities of the credit card industry is that qualifying for a credit card with a rewards program can be difficult. While you can qualify for a credit card without a rewards program and a high interest rate when you have a limited credit history, what many people want is access to a rewards program. For students, credit cards aimed at them can be a good choice if rewards points are desired.
Student Credit Cards
Credit cards marketed at students are designed for those who don’t have extensive credit histories. As a result, it is possible to qualify for these cards – and get access to a rewards program. Indeed, many major credit card issuers have student cards that offer rewards.
Student credit card rewards programs, though, don’t often include straight cash back. While there are a very few student cards that have cash back programs, most student rewards cards instead offer to let you earn points that can be redeemed for merchandise, travel and promotions (like concerts or music downloads). However, if you can’t otherwise qualify for a better rewards credit card, student cards aren’t a bad option.
Drawbacks to Student Rewards Programs
First of all, it is important to remember that the CARD Act, passed in 2009, puts a little more pressure on you to prove that you can afford to use a credit card. If you are under 21, you need to have proof of income, or a co-signer. If you don’t have a job, you might need a parent to co-sign on your credit card for you.
Another downside is that student credit cards often come with higher interest rates. This means that you have to be careful not to carry a balance. Don’t spend money on your creditcard just to earn points. Instead, plan out your purchases so that you are only buying what you would purchase anyway. Then, pay off the balance each month to avoid interest charges. You will build a credit history (that will help you qualify for a better card later) and you won’t be paying interest.
Finally, be aware that a student credit card generally comes with a lower credit limit. You might start out with a $300 to $800 limit, depending on your income and credit history. As you show that you are responsible, though, and as you make on time payments, your credit limit will be raised – or you can request an increase.
If you are student unable to qualify for a “regular” rewards credit card, a student rewards card can be a reasonable alternative, since you can use it to build credit and prepare for a better card later.
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