5 Myths About Student Credit Cards

Student credit cards can be a valuable financial tool when used responsibly, offering a way to build credit history and manage expenses. However, many myths surround these cards, leading students to make misguided decisions about their financial futures. Here are five common myths about student credit cards that you should stop believing.

1. High-Interest Rates on Student Credit Cards

Among the most consistent misconceptions, one could consider that the interest rates accompanying a student credit card are astronomical. True, student credit cards carry slightly higher rates compared to other credit cards; however, it is still a long way from as outrageous as people may make them out to be. Most students' interest rates vary from 13 per cent to 25 per cent, depending upon the issuer. However, these rates are comparable to those of regular credit cards, and if the balance is paid off in full every month, you will never pay interest. So long as students use it responsibly and pay on time, there's no reason why a student credit card can't keep their credit score healthy without getting slapped with heavy charges.

2. Student Credit Cards Are Only for Building Credit

Though it is true that student credit cards do build credit, they do so much more than that. These cards are made to assist students in managing everyday expenses such as groceries, transportation, or even textbooks, which form part of everyday student life. Some student credit cards have rewards programs that offer cashback or discounts, which will help students further when they make regular purchases. Therefore, these cards are not limited to credit-building alone; they are versatile financial tools for everyday use.

3. A High Income Is Required To Get a Student Credit Card

Another myth is that only people with high incomes can obtain a student credit card. However, many student credit cards are designed for people with very little or no income and few financial records. The issuer of the credit card looks at the student's status at school as a sign of their future earning potential, instead of requiring a high-paying job. Another condition with some student cards is requiring a co-signer that can be a parent so this option is more accessible to a minimal-income student. There's much to research, and based on individual budgets and ability to pay, an applicant has to apply for the credit card that best suits your budget.

4. Debt Accumulation When Using the Credit Card

One of the popular myths among students is getting a credit card leads to debt accumulation. Although it is true that credit cards can cause debt if not used responsibly, responsible use can actually prevent this from happening. The secret to using a credit card wisely is to keep spending within a budget, pay off balances in full each month, and avoid unnecessary purchases. Students who use their credit cards responsibly can avoid debt and even reap the rewards or cashback offered by their cards. Building a good credit history in college leads to better financial opportunities later.

5. Student Credit Cards Give No Benefits

Some students believe that credit cards targeted towards them have much in store, giving little more than a way of racking up debt. Many student credit cards, however, give cashback, award points, and discounts from various merchants. These benefits may be much smaller than those offered to other cardholders, but they might still be very valuable in their own right. Additionally, these cards often come with some tools to help students manage spending, such as mobile applications that track purchases and allocate budgets.

Student credit cards are excellent financial tools for building credit and managing money, but it is important to know fact from fiction. Knowing what is true and false will help students take charge of using credit responsibly while also enjoying the rewards and flexibility of having these cards.