Avoiding Mistakes with Student Credit Card Offers

College is expensive. There are hundreds, if not thousands, of dollars in fees and other expenditures waiting around every corner. From books to meals, incidentals add up quickly and even a part time job can still pose difficulties making ends meet. The end of the month is always a problem regarding funds. A college student credit card offer usually comes just in the nick of time…but is it a good idea?

When short on funds and in emergency situations most college students can appreciate a student credit card offer. It seems to be a great way to manage a cash shortage. However, the rewards may not always outweigh the disadvantages. So what are the benefits and disadvantages of accepting a student credit card offer?

The benefits of having a student credit card are many. If you’re short on funds for books the card is quite handy. If you’re waiting for your scholarship or loan funds to come through and have an emergency need for a new book, computer equipment or any other incidentals, a credit card can be a lifesaver. The single best way a student credit card helps a borrower is that it builds credit for the future.

One problem many students have upon graduation is that they have no credit to buy a house or car, even when they land that perfect job. A student credit card, if managed properly, will build credit during the time it’s used. A graduate that has a good base credit score after college is helped tremendously; even when trying to rent an apartment, not buy. Since many landlords run credit checks, a new graduate will have access to a better standard of living. Imagine being able to purchase a condo, instead of renting, just after college.

While there are many advantages to having a student credit card, there are disadvantages too. The card typically has a very low limit; sometimes as low as $250. Student credit cards often have higher interest rates as well. Since the borrower is an unknown risk (no previous credit), the lender takes a risk issuing the card and the interest rate reflects that risk. Paying only minimum payments, which is typical of college students, helps a lender out, but it racks up a lot of extra costs for the borrower.

When receiving college student credit card offers, it’s not necessary to take the first one, or even the only ones that come to you. Look into other lenders that haven’t wooed you. If you haven’t received an application from one lender, check into their rates and see if it’s a better fit. Shop around, but don’t apply, with different lenders. Find the perfect match for your needs.

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