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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1. Never use a credit card that advertises “everyone is approved” or something similar. These credit cards are fee ridden and rarely offer you the chance to increase your credit limit. More times than not, the card will have a $300 balance and already have a $100 in fees just for opening the account.

2. Use secured credit cards. If your objective is to repair your credit you must exercise some fiscal restraint. Secured credit cards have much lower rates and fees; however, you do have to make an initial deposit. This deposit will be your new credit balance.

Begin with a $500 deposit and make regular deposits to the account, as you would a savings account, to raise your balance. As your credit limit rises so will the influence and credibility the credit card makes on your overall credit report.

3. Do not use the card whatsoever! Seriously, when the card arrives simply activate it and shred it up, just remember to pay the annual fee each year. You do not need to use the credit card to establish credit. Remember, the goal is to repair your credit, not to go back into debt.

The variables on the credit report that influence and help to establish credit are, length of time the account has been open, the credit limit, the balance vs. the credit limit ratio and of course the payment history.

4. If you use the credit card, which you shouldn’t, NEVER let your balance exceed 50% of your credit limit. Doing this will trigger the credit card company to start snooping and begin to derogate your credit score. “Maxed” out credit cards are viewed as a liability, not an asset.

5. Repeat the steps above. The more credit references you have that have ZERO balances the better. Be sure to use a different bank for each account so that you have more than one company reporting positive information on your credit bureau.

The best feature about using a secured credit card is the ability to control your own credit limit. I can’t stress enough the importance of building a higher credit limit. Since a secure card acts like a savings account, meaning you get your entire deposit back if you close the account, it’s safe to send money in to the bank on a regular basis. This will increase your credit limit.

The key to using revolving credit is restraint. If you have multiple references in the bureaus that show zero balances, this demonstrates to creditors that you aren’t at risk for bankruptcy and that you have ample room in your budget to take on additional credit.

Once you establish your revolving credit you need to concentrate on your installment credit. Installment loans are loans that have a beginning and an end to the payments, like a car loan or personal loan. Doing this is a little more difficult than establishing revolving credit, but it can be done.

You can establish installment credit the same way you established revolving credit. What you need to do is seek out the small private banks in your area, stay away from the big banks like Bank of America. Most local banks will allow you to make a deposit and take out an installment loan against the deposit. Simply make payments on this loan for more than 12 months and presto! You have established installment credit. 

Nobody said repairing credit would be easy, again it takes time and restraint. However, if you follow the steps I’ve outlined it’s almost guaranteed to raise your credit score.

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