If your college mailbox is stuffed with offers for student credit cards, youre probably curious about what makes them different from regular credit cards. After all, student bank accounts offer substantial advantages in the form of low fees and free accounts. What makes student credit cards ideally suited to students?
The most important difference is that its easier to be approved for a student credit card. Most regular credit cards require you to have a minimum income above a certain level and want to see a lengthy credit history so they can decide how good a credit risk you are. When you have never had a credit card and you have a low paying college job, meeting the requirements of a regular credit card can be tough. However, student credit cards are designed to take this difficulty into account. Some require you to have a cosigner, usually a parent or guardian, whose own income is high enough to assure that the credit bills will be paid. Other credit card companies dont ask for cosigners. If you choose a card that requires a cosigner, be aware that the cosigner can see all the purchases you make. If you dont mind, then taking on a cosigner is the more secure choice. But if you prefer your privacy, then pick a card with no cosigner requirement.
Student credit cards sweeten the deal by offering money back on purchases you charge to the card. You could get back as much as 20% if you buy at the card companys partner retailers. That can add up to some remarkable savings. Before you jump at the offer, double check to be certain you like to shop at the stores that are included in the money back offer.
The tradeoff for getting a credit card without a credit history is that the company covers the risk of taking on unproven creditors by slightly raising the interest rate on their student credit cards. Student credit cards generally have interest rates at least a few points above the going market rate. Shop around to find the best value, and dont be misled by promotional offers of 0%; the real interest rate is much higher. A higher interest rate will result in increased monthly payments, but responsible use of your credit will reduce its impact. Keep your balance low by charging only what you need, and pay on time without fail so that you not only avoid hefty late fees, your credit rating looks better when you graduate. With a good credit rating and a good record of using your student credit card, you will find it easy to trade up to a regular credit card and a lower interest rate.

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