A Student Credit Card allows high school and college aged students to start building a good credit history.  It can be very difficult to qualify for a credit card if you have no credit history and no income.  This is where the student credit cards come into play.

Credit companies will allow young people to qualify for a credit card based on very few determining factors.  Often times these credit cards have up front fees, but in order to qualify and start building credit you will need to pay this fee.  Credit limits are generally very small, as low as $500 in many cases.

These cards are primarily to help a young person start building the necessary credit for down the road.  These student credit cards are not meant to be used to pay for college or a schooling like student loans. Interest rates are much to high and balances are much to low. If you are looking to pay for your college degree check out our financial aid and student loan information.

The Credit Card Accountability, Responsibility and Disclosure (CARD) ACT is a United States Congress bill passed this year.  Part of this bill ensures safeguards for young people.  It “requires issuers soliciting to persons under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual who will take responsibility for the debt; proof that the applicant has an independent means of repaying any credit extended; or proof that the applicant has completed a certified financial literacy course.”

Building Credit Responsibly

When learning how to manage and build credit is important that you do it responsibly.  If you do not know how to use your credit cards to build credit wisely you could fall into a debt hole very quickly. Use these simple tips to help you build credit responsibly.

  1. Do not spend money that you do not have. If is wise to only use the credit card when you have money in the bank that you can use to pay off the balance of the credit card.
  2. Use the credit card on “normal” purchases. Using the credit card for only items such as groceries and fuel is a great way to build credit and be sure you do not over spend.  Be sure to pay the balance of the credit card off every month to show good credit activity and open up the funds needed for the next months normal purchases.
  3. Pay the balance off every month. Only spend the money on the credit card which you can pay off at the end of the month.  This will show good credit activity and keep you away from piling up debt you cannot pay off.
  4. Do not spend wildly. Do not use your first student credit card to go buy large items you do not need.  These credit cards often times carry high interest rates and are meant to help you build credit.  There are better forms of credit to purchase large items like appliances and cars on.  You will qualify for these soon if you build credit wisely in the beginning.
  5. Do not rack up a high balance. You can get yourself into a big credit problem if you accrue a high balance that you cannot pay off.  This can damage your credit and cost you a lot of money.

Remember building credit wisely will help you tremendously for your future. If you are foolish in the ways you build credit it can be detrimental to your future.

Be careful to build credit the right way.  Educate yourself and take the right steps.

See the Best Student Credit Cards for 2011