Credit Cards for Students

By: Shelly Cruz

The credit card market today is expanding to include undergraduate and post-graduate students under its umbrella. There aren't many options for this type of card at present; many of the banks have been adapting their low-interest and lower-end cards for students' use. The student credit card market is a fledgling one at present, with banks using models from the USA for their own adapted cards.

Features

1.The most important feature of a student credit card is that there is no lower income eligibility limit, which allows even a person who doesn't earn money to obtain a credit card.

2.Such credit cards are simpler to obtain than normal credit cards, with no income tax returns required. The only documents required are proof of residence and proof of enrollment at any institute.

3.A second major feature of most student credit cards is that they offer a lower cash limit and revolving credit limit, along with a lower service charge on the revolving credit limit.

4.Finally, there is no joining or annual fee, and the car is generally valid for a period of 5 years, and eligible to students who are 18 and above.

Warning

A problem with student credit cards that has arisen in the USA, and which we would do well not to emulate is when credit card companies encourage students to use the student card to pay off their student loans. This plunges them deeper into debt, and often students are unable to pay back the loans on the credit card. The credit card companies compensate for a low monthly interest fees with an unusually high annual percentage rate, so the bills on a student card should be paid on time and in full.

NextGen Gold Visa Card

A good example of a student credit is the Bank of Baroda's NextGen Gold Visa Card, which is a card exclusively for students offering low interest rates as well as the primary features of their standard Gold card. The card is a prime example of a characteristic student credit card; 1.5% revolving credit service charge as opposed to 2.5%, and a higher APR.

Reminder

Three things that a student must remember before obtaining a student card:

The card should be used for small purchases, not for any extravagant items.
The bill should be paid in full before the end of the year, otherwise the high APR kicks in.
The details and offers of the card should be studied in full before a card is purchased, with special emphasis on the APR and the late payment charge.

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