Let’s debunk a few student credit card myths to give you a better handle on the realities of having a credit card during college. Here are seven common myths about student credit cards to stay vigilant for.
7 Student Credit Card Myths to Debunk
Are you unsure about student credit cards? Don’t worry, we’ve got you covered. We know that with so much information on the internet, facts can get mixed up with myths. In this blog post, we will debunk some of the most common myths about student credit cards. Our guide will help you navigate through the misconceptions to help you make informed decisions. So, let’s dive in and separate fact from fiction, student credit card edition.
What is a Student Credit Card?
Student credit cards are typically unsecured, meaning you don’t need a security deposit to act as collateral or as your line of credit. The main difference between a traditional unsecured credit card and a student credit card is the qualification process. The requirements for student credit cards are slightly lax compared to traditional cards. There’s a reason for the leniency.
Card issuers understand students may not have the most established credit history. As a result, qualifying factors can include proof of college attendance and no credit history necessary. Rewards student cards may relate to student life. For example, cash back on dining, books, and even reward redemption towards school tuition.
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Myth 1: A Student Credit Card Requires a High Income to Qualify
The truth is you don’t need to make a ton of money to qualify for a student credit card. Credit card issuers understand students may have little to no income while in college. For this reason, card issuers have alternative ways for students to get approved for a credit card.
Student credit card requirements vary and depend on the card issuer. However, there are a few general requirements that can guide you in the right direction. To qualify for a student credit card, issuers typically require proof of a steady income or a co-signer. Proof of reliable income is can be a part-time or full-time job or even leftover scholarship money. Issuers may also require proof of college enrollment. You must also be a U.S. citizen or a resident with a social security number.
Myth 2: Student Credit Cards have High-Interest Rates
This isn’t always true. Credit card interest rates vary from card to card. We understand why this may be a common misconception about student credit cards. Students are often considered a higher risk to card issuers due to their lack of credit history and job stability. However, all student credit cards are made equal. They each have their perks and benefits, and sometimes you can find student credit cards with relatively similar interest rates to those of traditional credit cards. For example, the following group of student credit cards and other traditional unsecured credit cards all share similar rates.
Myth 3: Student Credit Cards Require a High Credit Score
Not all student credit cards require a high credit score to qualify. You can easily find student credit cards that require no credit or fair credit. A great example is the Discover it® Student Cash Back and the Bank of America® Customized Cash Rewards Credit Card for Students. An alternative credit card option for students is secured credit cards. Unlike unsecured student credit cards, secured cards require a security deposit as collateral and a credit limit. A secured credit card option is best for students with savings who want to build credit.
Myth 4: Student Credit Cards Lead to Irresponsible Spending
Student credit cards are not only for impulse shopping. If used responsibly, students can learn the basics about building credit and budgeting. Responsible budgeting and spending habits are essential to becoming a credit card holder with a prime credit score. Building credit during college doesn’t have to be difficult. Consider these basic tips:
|Check your credit score regularly||Keep a budget and only spend within your means||Always pay on time and never miss a payment|
|Pay more than the minimum payment if possible||Never max out your credit card||Be mindful of your credit utilization ratio|
Myth 5: You Need a Co-Signer for Every Student Credit Card
Earlier we mentioned a few requirements to qualify for a student credit card. One of which was a co-signee, which is not always required. Students can qualify for credit cards independently based on their creditworthiness. However, some credit card issuers may require a co-signer if you are under the age of 21. Typically, the co-signer is a parent or guardian who becomes liable if the student fails to make a payment.
Myth 6: Student Credit Cards Don't Offer Rewards
This statement couldn’t be further from the truth. Many student credit cards offer rewards and cash back programs. We mentioned a few of them earlier in the article, like the Bank of America® Customized Cash Rewards Credit Card for Students. It earns up to 3% cash back on a category of your choice, such as travel, gas, dining, and more. Additionally, student cardholders earn 2% cash back on groceries and 1% cash back on all other purchases.
Myth 7: You Can't Build Credit as an International Student
International students can build credit in the U.S. using student credit cards. However, they will most likely need an ITIN (individual taxpayer identification number) instead of a SSN (social security number) to apply for a student card. Most major issuers will accept an ITIN in place of an SSN on a credit card application.
Each issuer will have its own set of terms and policies in place, so your safest bet is to call the issuer to obtain information on the process for international student applications. Some issuers accept a passport number in place of a SSN.
Student Credit Card Myths Debunked!
In conclusion, debunking common myths about student credit cards can help you as a student make an informed decision. Aim to use credit cards responsibly and effectively as part of your financial journey. Remember, student credit cards do not necessarily have high-interest rates.
You also do not need a perfect credit score to qualify for one. Additionally, they can be rewarding, and you don’t always need a co-signer to apply. Keep a budget, always pay on time, and be mindful of your credit utilization ratio for maximum credit success.
Related Article: 7 Common Myths About Secured Credit Cards
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