Credit Card for Students

Some banks provide credit cards to students who take an education loan from them. One such example is the SBI Student plus Advantage Credit Card. It is one of the most popular cards in the category. The bank charges neither an annual fee nor joining fee on this card.

Secured Credit Cards

Secured credit cards are issued against fixed deposit and can be a great option for students as they can get the benefits of a credit card as well as earn interest on their deposit.

If you already have a fixed deposit account, you can get a credit card issued against it. You can expect a credit limit of up to 80% of the fixed deposit amount. The minimum fixed deposit amount varies from bank to bank.

Some other reasons to get a Secured Credit Card are:

• Withdraw cash up to the issued credit limit
• Guaranteed approval. As long as the customer is able to open a Fixed Deposit account
• Usually, no joining fee or annual fee is charged
• Income Proof is not required
• Earn rewards, cashback, discount on spends

Suggested Read: Best Secured Credit Cards in India

Add-on Credit Cards

Add-on cards are supplementary cards issued against a primary credit card. This is the easiest way for a student to get a credit card as it does not involve the same scrunity as a regular card. However, if you wish to get a student credit card to build your credit score, an add-on card will not be helpful. Only immediate family members of the primary user can avail add-on cards. The credit limit of the primary card is shared with the add-on cardholder.

Benefits of Add-on Credit Card for Students

Credit Limit: Students will be sharing their parent’s credit limit. This may be much higher than what most banks will extend to them.

Features & Benefits: Most of the credit card providers extend almost all the benefits to the add-on cardholder. This includes discounts, movie, dining benefits and sometimes even premium benefits like lounge access.

Security: In case the student is charged for a wrongful transaction they can rest assured that their money will be returned.

Credit cards, if not used responsibly, can be detrimental to student’s credit score. However, they also present the perfect opportunity for parents to teach their kids about financial responsibility.

Pros and Cons of Credit Cards for Students

Pros

Helps in Crisis: A credit card can be a great asset during a crisis, medical or otherwise. It also allows cardholders to make payments at a later date or pay off through EMIs. This is beneficial for students who have to buy, items for projects, expensive books, etc..

Starts Credit Journey: A student credit card can be the first step in a person’s credit journey. With responsible usage, students can build a good credit score which will be beneficial when they apply for a loan or credit card in future.

Cons

While credit cards come with several benefits, it is also true that credit cards can run a large debt for their users if not handled properly. A small debt can get out of hand because credit card interest rates are among the highest in the market and can go up to 42% p.a. So, if the student misses a few payments, it can easily start a debt spiral which is not a good way to start the financial journey.

Considering all this, parents should play a proactive role in their kid’s financial life. While credit cards are the perfect opportunity for parents to monitor their kids’ expenses, they should also keep in mind the risks associated with it and guide the kids accordingly.

Credit card eligibility criteria vary across different card providers.

• For credit cards against student loans, the applicant must first be able to secure an education loan
• For Add-on cards the student must be above 18 years of age and their immediate family member must have a credit card
• For a secured credit card the student must be able to open a Fixed Deposit account

Income Proof – Income Proofs are not required when applying for an add-on card, secured credit card or cards issued along with education loan. However, if you are a student as well as an income-earner (with a stable job), some banks may be interested in offering you a regular credit card. For this, you will need to submit your income documents such as salary slip, ITR, bank statement, etc.

The application process for a student card depends on the type of credit card the consumer is going for. Given below are the details.

Add-on Card: If the student is 18 years or older, they can ask their immediate family members to apply for an add-on card. The process is relatively quick and only basic KYC documents are required.

Secured Credit Card: You need to open a fixed deposit account in a bank to get a secured credit card. If you already have a fixed deposit account, then request the bank to provide you with a secured credit card against it.

Credit card against Student Loan: Here, students can avail a student loan from a bank that provides credit cards on the loan. A popular example of this is SBI Student plus Advantage Credit Card.

Can Minors get student credit cards?
Minors can avail add-on credit cards. There are some banks that extend add-on credit cards to students as young as 15 years of age.

What is the maximum credit limit that can be availed on a student credit card?
The credit limit assigned to the student varies from case to case. The bank will inform you about the credit limit once your application has been approved.

Can secured credit cards be used overseas by students?
Yes, credit cards issued against fixed deposits can be used by students studying overseas. Do note that a Foreign Transaction Fee will be applied on all the transactions. Cash withdrawal fee and finance charges will be applied as well on ATM withdrawals.

Can I give my credit card to my son or daughter who is going away to college?
It is not advised that customers share their credit cards with anyone else. The credit card is made to be used by the person whose name is printed on the cards only. You can, however, get an add-on or secured credit card for your kids.

What other options are there to send money to kids studying abroad?
There are many ways through which you can send money to your children who are studying abroad. These are:

• Cash
• Forex Cards
• Travellers Cheque
• Bank Transfer, many countries allow foreigners to open bank account. You can send money via Foreign Outward Remittance