Secured credit cards for students is as relatively new concept, and one you should certainly find out more about. It wasn’t that long ago college students were offered student credit but today you can find secured credit cards being offered in our high schools.
As a parent your first reaction might be “no way,” but you might want to rethink that. Why? Well first of all secured credit cards for students are an excellent way for students to build credit safely. Unlike the regular student credit card offers you see at college that can land a student in a heap of trouble, secured credit cards cannot.
The use of a secure card is a smart way to build a good credit score at a young age, whether it’s in high school or college. It’s also a solid method for learning about credit, how it works, how it makes it easier to spend, how there are ramifications for their actions. When they learn to manage credit at a young age, they are much more likely to handle credit successfully as adults.
Initially student cards offered where a traditional credit cards. Because the student was a minor the parents had to co-sign and any debt was the responsibility of the parent. While these helped to build a sense of responsibility, it was not the same as with the secured credit cards we see today.
The secured credit cards come in a couple of different methods. Some banks will have you put the money into the bank as security and this is used as a guarantee that you will pay your credit balance. The bank will offer you a credit limit that is either a percentage of the money on deposit or the entire amount.
There is also a card that is linked to the parents’ bank account and it lets the child keep refilling. This is not a good choice for all students. It depends a great deal on maturity.
And finally there is the prepaid secured credit card where you put more money on the card and keep refilling it as you use it. The traditional student card is quite the opposite, which is why so many students find themselves in a bit of a mess.
With the traditional student credit cards you are given a credit limit, and each month you make a payment. The object is to pay off the balance at the end of each month but that seldom happens. This is where the trouble can start to occur.
The student makes a payment (often minimum) and then keep spending. Soon they find themselves with a credit card that’s full and they aren’t making any ground on bringing the balance down.
This might not be a problem if all students were at the same maturity level, but they aren’t and no one wants to see their child in a credit mess. You can see why secured credit cards for students make an awful lot of sense. What a great way for students to become credit responsible.
Aubrey Clark is an Author and editor for Direct Banc, which features bank secured credit cards. Aubrey is a financial expert who has spent over twenty years working and training in financial markets. He current project is a tutorial to help readers to understand how to obtain secured credit cards for students.
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