Student Credit Card Benefits

There are both short-term and long term advantages to having a credit card. This article reviews some of the top draws for making this choice.

If you’ve ever gone to the grocery store with $30.00 and had your total come out to $32.21, you know from experience one reason why credit cards can make life easier: you don’t always have to have the correct amount of cash or carry a checkbook. And have you ever seen the perfect shoes in a situation in which you weren’t expecting to make a purchase and/or in a place which you rarely frequent. Even if this is a reasonable, planned purchases, Having a credit card can allow you to make the purchase on the spot, rather than having to return at a later time. Need to buy a used textbook online to save over the campus bookstore cost? Run out of meal points unexpectedly so that only part of your dinner is covered? These are both times when a credit card can help make purchasing easier.

Have you heard of a credit score - the FICO score of 300–850 that goes a large way towards determining your financial opportunities by judging how "creditworthy" you are? FICO is an acronym for Fair Isaac’s way of rating borrowers. Having a good credit score can help you overcome old credit problems, obtain loans more quickly, have access to more credit when you need it - for example, when you want to buy a home, and borrow at lower rates. (For more information, go to fairisaac.com and search for the credit scoring booklet that you can download as a pdf file free of charge). Having a student credit card can help you achieve a high FICO score.

How? Two ways. First, experts say that having several credit cards with a good history is one factor that contributes to a higher FICO score. Second, experts add that having a history of about 30 years and accounts that you’ve held for about 20 years are other factors that go towards a high score. And clearly, if you start this long process when you’re in college, you’ll get a head start towards your 20 and 30 year marks.

With all the opportunities for various types of rewards, most people can find something to interest them. Game time on World of Warcraft or a Major League Baseball jersey may be fun rewards to receive, but if you have to make purchases, and can do it on a no-fee or low-fee card, you may also accrue a more substantial or important kind of benefit. Here are some details:

• Frequent Flyer Cards If you live far away from your college, you may be making at least four airline trips per year. If you qualify, a card that rewards you with miles for purchases could be a good investment. Other cards that award points, rather than miles, may allow you to use them for air travel.
• Cash back A number of specific student cards are cashback cards. When you’re considering them, look at the types of purchases that gain rewards, the amount of the reward, and whether there is any introductory offer and for what period of time.
• 529 Cards These cards, offered by MasterCard and American Express are lined to 529 college-savings accounts and put rebates into the college savings, rather than delivering it to the card holder. One account can receive contributions from multiple cards, so a whole family could contribute to a college student’s fund, the moneys in which can be used only for specific college expenses like tuition, room and board, or books. Check the terms of both the 529 account and the credit card carefully. You may wish to check the article on the topic at creditcards.com.

If you have good grades, also keep an eye out for cards that reward you for your grade point average. In July, 2008, CitiBank had an mtvUÔ Platinum Select VISA card for college students that offered such a benefit.