Credit cards made available to students differ from the usual credit cards. The credit card companies have broken down the needs of student and their person financial circumstances. To begin with, most students do not have steady incomes. The odd dollar made by working part time jobs can hardly suffice to make credit card payments. Credit cards are therefore custom-made for students, taking into consideration these aspects.
The need for expenditure is a very important aspect that credit card companies take into consideration. The most urgent need for money may be medical expenses, travel and other college related emergencies. These expenses are relatively small. Student credits therefore, have lower credit limits when compared to the other credit card limits. The credit limit on a card is also determined in some extent to the amount that the bank, or company believes the applicant will be able to repay. This is based on details such as income, assets owned etc. The source of income for a student will mostly be negligible. Therefore the credit card will be issued based on the income of a guardian or parent. The credit card company will ask the applicant to furnish the details of any valuable assets that he/ she owns. This will impact the credit limit allowed.
Different credit card companies have different schemes and policies for students. Some companies offer a reduced interest rate, or a period of lowered APR. Some cards even offer a 0% APR on purchases made for a certain time period, say six months to a year. The schemes offered will differ from company to company. Students interested in availing a credit card must identify a company and a scheme that best suits their purposes. There are several hidden costs that one must watch out for.
Some companies also offer a variant of the credit card, the cash advance. The cash advance functions more like a loan than it does as a credit card related scheme. The cash advance is a sum of money that the bank or credit card companies makes available to students to help them meet expenses till they are paid or get money from other sources. Students who work and students often run out of money close to payday. These cash advances are useful as they meet immediate needs. The total amount payable which is inclusive of tax is considerable lower as the cash advance is a one time affair and not prolonged over time like credit cards are.