If you’re starting to build your credit, Hanfincal (hanfincal.com) bet you’re confused about student credit cards vs regular. What are they, and which one will be more beneficial to you? We hope that this article has answered some of your questions. Continue reading to learn more.
1. What is a secured credit card?
A secured credit card is a kind of card that requires a cash security deposit when the account is opened. It is a possibility for students who have little or no credit history. It is also an option for people who have a bad credit history.
The deposit reduces the credit card issuer’s risk: if you don’t pay your bill, the issuer can withdraw funds from your deposit. Thus, people with bad or no credit can apply for these cards.
2. What are the pros and cons of secured credit cards?
2.1. Advantages of secured credit cards
- Build credit: This is the most important advantage of a secured credit card. Paying the minimum payment on time every month and responsibly using your credit card can support you in building or rebuilding your credit.
- Secured cards can assist you in transitioning to unsecured cards: Some credit card companies may permit you to transition from a secured card to a traditional card without closing your original line of credit.
- Cardholders can earn interest on their deposits.
- Secured credit cards provide a variety of rewards such as cashback, credit card reward points, and so on.
- The approval process for secured credit cards is faster and easier.
- Added advantages: Some secured cards include potentially beneficial features such as credit fraud alerts and free credit monitoring.
Note: If you want to improve your credit, look for a secured card that reports to at least one of the three major credit bureaus: Experian, Equifax, and TransUnion.
2.2. Disadvantages of secured credit cards
- Extra fees: Some secured card issuers tack on extra fees, such as an application fee and annual account fees.
- High-interest rates: Secured credit cards typically have 20% or higher APRs.
- Initial security deposit: The main reason you’re likely to be approved for a secured credit card is that you’re hesitant to get one in the first place. If you’re a broke college student, even a few hundred dollars can seem like a large amount of money.
3. What is a regular credit card?
A credit card is a payment card that accrues a balance that must be paid off each month when someone uses it to make purchases. Credit cards impose the condition that cardholders pay back the borrowed money, plus any applicable interest and any additional agreed-upon charges, either in full by the billing date or over time.
4. What are the pros and cons of regular credit cards?
4.1. Advantages of regular credit cards
- If you are over the age of 18, you may apply.
- Allow you to build credit.
- Frequently have higher credit limits than student cards.
- Many attractive options you can select include travel cards, cash back cards, and balance transfer cards.
- Typically have higher reward/cash back earn rates than student cards.
4.2. Disadvantages of regular credit cards
- Most require good to excellent credit.
- You have to have a stable source of income.
- Premium benefits are typically paid for with an annual fee.
5. What are student credit cards?
A student card is a credit card specifically designed for college students. Student cards function similarly to standard credit cards, except that you must be at least 18 and enrolled, either full- or part-time, in a college-level institution to qualify for one.
You’ll also need to provide proof of regular income or have someone, such as a parent, cosign your application on your behalf.
As you build credit with this card, you’ll get extra perks like cash back, free credit score monitoring, and incentives to keep your grades up.
6. What are the pros and cons of student credit cards?
6.1. Advantages of student credit cards
- Easy to obtain than standard cards: Minimum income requirements are typically lower, and as a student, you can list many sources of income.
- A great way to begin building credit: Because a student card is still a credit card, using it also impacts your credit score.
- Educates on financial matters: This card can help you keep track of your monthly spending and get into the good financial habit of paying your bills on time.
- Get one without a credit history: To apply for a student card, you must have a low or no credit score.
- Useful in emergencies: A student credit card can act as a safety net if you are stuck in emergencies where you need money immediately.
- Extra benefits: Like regular credit cards, some student credit cards offer rewards such as cash back or discounts at specific retailers.
- Have an option to upgrade to a standard card: After graduation, some credit card companies and credit unions will allow you to upgrade to a standard card.
6.2. Disadvantages of student credit cards
- Fewer rewards: While some student credit cards include rewards programs, they typically provide fewer benefits than their regular counterparts.
- Low credit limit: Most student credit cards have an initial credit limit of only a few hundred dollars.
- High-interest rates: Typically, student credit cards have higher interest rates than traditional credit cards. Many student cards have annual percentage rates (APRs) that easily exceed 20%.
- Extra fees: Many student cards include additional fees such as an annual fee, foreign transaction fees, and late fees.
7. What is the difference between a student credit card and a regular one?
The primary difference between a student credit card and a regular credit card is that a credit card is only designed for college students.
More information about the distinction between two types of credit cards can be found at:
|Student Credit Cards||Regular Credit Cards|
|Credit levels||Limited, fair, good, excellent, new to credit||Fair, good, excellent|
|Reports to credit bureaus||Yes||Yes|
|Credit limit||$300 – $5,000||$200 – $50,000+|
|Made available for||Students||Anyone over 18 years of age|
|Annual fees||Most charge no annual fees||There are numerous no-fee alternatives; premium cards may charge up to $500 per year.|
|Unique benefits||Student-specific benefits, such as a statement credit for good grades, are available to cardholders.||Benefits such as airport lounge access and comprehensive travel insurance are extremely valuable.|
|Added benefits||Most offer cash back/rewards||High reward earn rates include complimentary insurance coverage, extended warranty, purchase protection, airport lounge access, and other benefits.|
8. Should you get a student credit card or regular credit card?
Your current credit history influences the decision between a student credit card and a regular credit card. You have a better chance of obtaining a student credit card approval if you have little or no credit history and little income. If you already have good credit, you may benefit from getting a regular credit card that offers high category-based cash back or rewards.
Comparing student vs. secured credit cards makes sense if you cannot get a standard credit card. If you are eligible, student credit cards are frequently the better option. Many do not charge an annual fee and do not require a deposit. However, suppose you do not qualify for a student credit card, either because you are not enrolled in college or already have some negative marks on your credit report. In that case, a secured credit card is a viable option.
As a result, learn each card’s requirements, benefits, and drawbacks, and compare them to your credit history to determine which card is best for your current situation.
Have you distinguished student credit cards vs regular? The information above from Hanfincal (hanfincal.com) is some primary points and highlights you should not overlook. We hope you can find the answer after reading this article.
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