When my little sister went to university, they were handing credit cards out like free candy. Students, who had no money to spare, were given hefty credit limits and then somehow expected to pay them off on a budget. Things have changed and credit cards aren’t as easily obtained as they were then, but in terms of getting credit, there definitely are options available for students.
As I’m sure you well know, some purchases require the use of a credit card, something that is not readily available to everyone, especially those with bad credit. If you want to make online purchases, book a rental car, hotel or flight, you need a credit card to do so. Credit cards are also very handy in emergency situations where debit cards aren’t accepted.
If, as a student, you haven’t established the credit history required to get a credit card, a prepaid credit card might just be the answer for you. Prepaid credit cards offer the same conveniences as normal credit cards, the difference being that the “credit” amount is paid for upfront. It’s safer to carry than cash and you don’t need a bank account to get one. The only requirements are that you have to be over 18 years of age and you must put the money down on the card yourself.
Each month, when the bill arrives at your home, you need to pay the total amount “owed” off, or the amount available lessens as it’s used. Just as with other types of credit cards, prepaid cards charge annual fees, reloading fees and withdrawal fees. Because no payment information is reported, prepaid credit cards don’t give you the opportunity to establish, build or repair credit.
Secured credit cards are similar to prepaid cards, but slightly different in that they charge an interest rate. Like prepaid cards, you deposit a certain amount of money onto the card to create your limit – anywhere between $300 and $1000 – which acts as collateral. Secured credit cards charge interest rates anywhere between 14.8-19.8%. Like other credit cards, secured credit cards charge an annual fee and withdrawal fees. Every card is different, so be sure to compare cards first and read through the specifics before choosing one. Secured credit cards are particularly useful for those who want to establish credit or repair damaged credit.
Many financial institutions and credit card companies offer credit cards specifically designed with the student in mind. They usually require some sort of credit history, but nothing extraordinary – a fair to good credit rating seems to be acceptable. Student credit cards also offer perks, from points and reward systems to movie and music credits. Be sure to read the fine print because some of these cards tack on heavy fees for certain features.
Here are a few of the best credit cards on offer for students:
MBNA Studentawards WorldPoints MasterCard
Credit needed: Good
Scotiabank SCENE Visa
Credit needed: Good
Scotiabank L’earn Visa Card
Credit needed: Fair
Capital One Low Rate Guaranteed Secured MasterCard
Credit needed: None
** Be sure to read the terms and conditions before signing up for any credit card.