The Unsecured Student Credit Card

Category: Finance, Credit.

Student credit cards come in a variety of forms.

The first is an unsecured student credit card while the other is a prepaid debit card. But, there are two primary forms in which a student credit card can be found. Understanding the differences and the pros and cons of each will help you to better determine which is best for you. An unsecured student credit card is like a traditional credit card. The Unsecured Student Credit Card. With this type of student credit card, the college student( or high school student, as the case may be) receives a line of credit. The lower limit is also in place in order to help prevent the college student from accruing an insurmountable debt.

Typically, student credit cards keep low lines of credit of about$ 500 to$ 1, 00This is partly because those applying for student credit cards typically have very little credit history and do not qualify for higher credit limits. Not all credit cards for college students have such a low credit limit. Similarly, if you want the restriction of a small credit limit in order to keep yourself under control when it comes to spending, be sure to seek a student credit card with a low credit limit. So, if you require a student credit card with a larger limit, you might want to shop around. The Student Prepaid Debit Card. In order to make purchases with a student prepaid debit card, money needs to be placed on the card first. A student prepaid debit card is a card that looks like a credit card and is accepted everywhere a credit card is accepted, but has one major difference: a line of credit is not extended to the cardholder.

This money can come from a variety of sources. Or, the student s parents can choose to add money to the card. The student can place the funds on the card him or herself. In fact, parents can generally set it up so a portion of their checks from work is added to the debit card each pay period. Student credit cards can go a long way in helping to establish a student s credit history. Pros and Cons of Student Credit Cards.

In addition, a student who does not have money to pay up front can certainly benefit from being able to take out small loans with the credit card in order to make purchases. So long as there is credit available on the card, the student can spend as much as he or she wants. Another perk is the fact that the student doesn t have to wait for money to be added to the card before using it. On the other hand, a student credit card increases the chances of creating a poor credit history. In addition, many students are already starting their adult lives in debt as they pay off college loans. If the student accumulates a debt he or she is unable to pay, or if the student is late making monthly payments, it can reflect poorly on the credit reports. Adding more debt from a credit card can be overwhelming and seem impossible to overcome.

A student prepaid debit card makes it easier for a student s parents to keep track of college expenses and to monitor the student s spending. Pros and Cons of a Student Prepaid Debit Card. In addition, there is no risk of destroying a credit history that has yet to be created because the student cannot spend more than what is placed on the student prepaid credit card. Unfortunately, prepaid credit cards generally have many more fees than credit cards for college students. Many of these cards also report to credit bureaus, which helps in building a positive credit history. In fact, there usually are no fees associated with credit cards. There are also fees added every time more money is placed on the card.

Debit cards, on the other hand, often have an application fee and an annual fee. All of these fees can easily add up to hundreds of dollars each year. When it comes to choosing which is right for you, it is really necessary to evaluate your own needs and spending habits.