The Impact of Student Credit Cards: All You Need to Know

Managing finances can be a challenge for most students. From college supplies and rent to commuting and occasional outings, expenses can quickly add up. A practical way to ease this financial strain is by using student credit cards. These cards not only help you build your credit score but also offer rewards like cashback, points, and discounts. Let’s explore some of the best credit cards tailored for students.

ALSO READ: What is a credit score? How does it work?

What is a Student Credit Card?

Student credit cards are specifically designed for young individuals with limited or no credit history. They offer a way to start building credit while providing benefits customised to the needs of students.

Most banks offer student credit cards either through an add-on card or against a fixed deposit of a certain amount.

ALSO READ: Different Types of Credit Cards in India

Impact of Student Credit Cards

Student credit cards are an attractive option for the following reasons:

1. Build Credit History

If you start building your credit history early, you can pay your credit card bills on time and keep your credit utilisation ratio low to establish a robust credit score – making it easier to secure future loans, new credit cards, etc.

2. Develop Financial Responsibility

Student credit cards can instil financial discipline by spending judiciously and manage the students’ monthly expenses per their budget. They will, thus, understand the importance of making timely payments without accumulating debt.

3. Offer Rewards

Most student credit cards carry rewards programs that offer cashback, points, or discounts on everyday purchases like groceries, dining, and travel.

4. Save Money

Student credit cards often have low fees. Some issuers even waive annual fees or offer 0% introductory APRs, making them more affordable and accessible for students who are using a credit card for the first time.

5. Provide Emergency Help

A student has a financial safety net in unexpected situations, such as repairs or medical emergencies. Access to credit in emergencies is helpful, especially for students with limited financial resources.

ALSO READ: OneCard vs. Other Credit Cards – Which One Should You Go For?

Tips to Choose the Best Student Credit Card

Many tend to ignore the process of researching the best credit cards for students as they do not know where to look for answers. Here’s one place they can start:

1. Interest Rates

Look for cards that charge low APR on purchases during the promotional period. Moreover, look for a card with a grace period – the time between purchases and the due date when you can avoid interest if you pay your balance in full.

2. Fees

Some cards have annual fees or joining fees. The cards with no fees are often the best credit cards for students. Be mindful of any late payment fees associated with the card. Students are more susceptible to delayed payments because of a lack of stable sources of income, so it’s wise to consider a card like One Card, which has a minimal late credit card fees.

3. Perks

Always consider cards that offer rewards like cash back or points. You can redeem them to subsidise your purchases or travel. Furthermore, there are cards with rewards tailored to students, such as discounts on textbooks, online purchases, or travel.

4. Credit Limit

Pick cards that allow you to increase your credit card limit slowly. Set a low limit at first to avoid overspending. You can eventually request a credit limit increase based on your spending pattern.

Conclusion

It is clear that the best credit cards for students are the ones with affordable interest rates and fees besides exciting rewards. Their impact clearly underscores the advantages of credit cards for India’s 5.3 crore students who will pursue higher education in 2025. They will need financial tools that simplify their purchases as well as provide cost savings. One Credit Card is a viable option as it offers numerous rewards for your spending, card controls through an app, and overall budget limit, among more. The card is a valuable tool to initiate students into credit cards and offer a seamless experience.

FAQs

1. What is a student credit card, and how does it work?

Student credit cards allow students to start building credit while offering benefits tailored to their needs, such as rewards programs and low fees. Most banks issue them as an add-on card or against a fixed deposit.

2. Why should students consider getting a credit card?

Student credit cards help students build a strong credit history, develop financial responsibility, and provide rewards like cashback or discounts. They also serve as a financial safety net in emergencies, making them a practical option for managing expenses.

3. What features should students look for in a credit card?

Students should prioritise cards with low or credit cards with no annual fee, affordable interest rates, rewards programs, and flexible credit limits. It’s also beneficial to choose cards that offer perks like discounts on essentials, including textbooks or online purchases.

4. Are there any risks associated with student credit cards?

Yes, misuse of credit cards, such as overspending or missing payments, can lead to accumulating debt and a poor credit score. Students should use their cards responsibly, pay balances on time, and avoid maxing out their credit limit.

5. How can students ensure they make the most of their credit card?

Students can maximise benefits by paying off their balance in full each month to avoid interest, using their rewards for savings, and tracking their spending to maintain a budget. Regular monitoring of statements can also help identify unauthorised transactions or errors.