What are Student Credit Cards?
Student credit cards are a popular option for students who can benefit from no-fee, low-interest cards during their non-earning period. Cards also come with an option of building credit limit and an easy way to make purchases without carrying paper money with them all time.
Why Canadian Students May Need a Credit Card
Some people don’t approve of their children having credit cards due to their potential financial risks. On the other hand, students want access to a credit card. It is also essential that students get a chance to make monetary decisions before they enter their professional lives. They are at an advantage while using low-interest cards that make them less at risk of accruing debt.
Why Have a Student Credit Card?
These are some ways credit cards are beneficial for students:
- When a student gets a credit card, they also understand the usage and effectiveness of the card. They start to maintain the credit limit, and they get a chance to gain a positive credit score for future investments, like building a home or buying cars.
- With student credit cards, parents can keep an eye on the activities of their kids and guide them in case their kids require any help.
- There are many student cards to prepare them to take on credit cards at later stages in their lives. When they become experts, they may switch to another credit card that may have additional perks.
- Many option cards have limits, and with a normal credit limit, students can control their extra purchasing behaviours to plan for future spending.
Drawbacks of Student Credit Cards
There are also some potentially negative aspects to student credit cards, including the following:
- Credit cards for students should not be used as a means to spoil children. Students in high school are still very young and often immature at this age and often end up spending too much on credit cards that lead to a bad credit rating if unpaid. Many parents prefer school-aged children not have credit cards.
- With more students getting credit cards, the interest rates are also rising, so the amount to be returned to the bank increases. As students who are not working and depend upon their parents for financial support, they may not recognize the value of the money they spend and disrupt the family budget.
- There is a minimum age requirement. Check with your banking institution for details. It is good for parents as they are not going to suffer any financial pressure until their kids reach the threshold age. On the other hand, this is a disadvantage to students also who start working at an early age and need credit cards earlier.