What is a Student Credit Card?

If you've made it to university, you may be thinking that it's about time to apply for a credit card. Even if you hadn't considered it before, by the time you get settled into your room on campus, you'll likely have been approached by at least one campus representative for a credit card company. They may even have told you that it's a special student credit card designed just for the way that college and university students spend money. Wait! Don't do it yet! There are things that you need to know to compare credit cards so that you know that you're getting the best possible deal when you apply. Let's start with the basics:

Why a student credit card?
Nearly every card issuer in the UK offers one or more student credit cards. The reason is simple - most college students don't have the established credit history or income to qualify for a standard credit card. Because you don't have a history of paying bills on time yet, the card companies have no way to predict whether you'll make your payments on time or not. That represents a risk for them. On the other hand, no history means no adverse credit history - and the majority of college and university students are good credit risks - they just haven't had a chance to prove it yet.

Usually, a student credit card will carry both a higher rate of interest and a lower spending limit to minimize the loss to the issuing company if you should default (not pay the bill). The low spending limit is also a protection for you - it keeps you from going too deep into debt on that card.

Things to Know When You Apply for a Credit Card
Credit card companies don't lend you money out of the goodness of their hearts. They're in the business to make money, and they do that by charging you interest on the purchases that you charge to your card. Interest (and fees) are the reasons that it's so easy to get deeply into debt with a credit card. That's why it's important to compare credit cards and offers before you choose one to apply for. You also need to know what fees you'll be responsible for and under what circumstances, as well as any benefits and rewards that come with your card. All of those things are important when you sit down to compare credit cards with one another.

One other thing you need to know before you sit down to compare credit cards - how you intend to use your credit card once you get it. There are two basic types of card users:

Pay it off every month
If you intend to only charge as much on your card as you can pay back every month, then the APR (annual percentage rate) isn't as important as the other fees and rewards, and how long you have to pay off your bill before they start charging you interest. That's because as long as you pay off the full balance on time every month, you won't have to pay any interest. If you're this type of customer, compare credit cards to see how much they'll cost you each year (annual fees) and what sort of rewards you'll get for using the credit card.

Buy big things and pay them off a little each month
This is called 'carrying a balance', and if you carry a balance, you'll be paying interest on it. In that case, when you compare credit cards, you'll want to choose from cards that have low interest rates.

www.moneyeverything.com makes it easy for you to compare credit cards based on the way you'll use them. You can find profiles on student credit cards, information on how to use credit cards responsibly and links to all the major credit card offers at moneyeverything.com.