Credit card options for college students and even high school students have exploded in recent years as credit card companies try to find new markets for their products while trying to balance the increased risk involved. This has created tremendous choice but, sometimes too much choice can be confusing for the uninitiated. Students often report that they respond to credit card offers that come through the mail or get their first credit card or debit card through the bank that their parents use. While trusting parents’ advice is almost always a good bet, perhaps a better strategy is to do your homework before choosing your first card. Statistics show that a student’s first credit card is often kept for many years out of either initial loyalty or just inertia. Whatever the reason it is another motivation for credit card companies to get you to take their card since you will probably have it for years to come.
But this raises the question of how and where to find out what’s available in the student credit and debit card marketplace. CreditCards.com offers students a great resource with our student credit card section where top rated student credit and debit card options are detailed that allow you to compare to determine which best suits your needs. Using this type of free consumer service allows you to be in charge and choose on your terms rather than reacting to what comes in the mail or is available at your local bank. Major issuers such as Discover Card, Chase and Citi issue cards specifically for students now that provide competitive rates and cash back rewards.
To begin your research you should understand the difference between a student credit card and a student debit card. A credit card is a standard Visa, MasterCard, Discover or American Express Card. There is typically a limited credit line ($500 – $1,000) assigned initially and sometimes, opening the account often requires a parent to co-sign (i.e., agree to be the responsible party should you not be able to pay an outstanding balance).
A student debit card is a prepaid Visa or MasterCard that does not require a parental co-signer if the student is at least 18 years old. These prepaid debit cards offer a host of advantages to those with little or no credit history and are accepted anywhere that is served by Visa and MasterCard. There is no credit check to apply and the cards can be funded and reloaded through the phone, in person, at ATMs or over the internet. These cards are just a plastic form of your own money, as opposed to short-term borrowing instruments, such as credit cards. While they prevent over-spending, their disadvantage is that they do not help students build positive credit scores by handling credit responsibly.