Student Credit cards
With the amount of convenience and benefits associated with them, credit cards have become almost a necessity for everyone. Thus the need for special credit cards for students was felt too, not only by students but also by credit card suppliers. However, the student credit cards are designed a bit differently from the normal (personal) credit cards.
Since most of the students do not have a job or a regular source of income, the credit card suppliers have to tackle the risk of credit card holder (i.e. student) not being able to pay their credit card bills. The situation is further compounded by the fact that for most of the students, the student credit card is their first credit card. This means that they have no experience in using credit cards. To cover these risks, the credit card suppliers impose certain additional restrictions on the student credit cards. One of the main restrictions is the credit limit which is generally kept much lower for student credit cards (generally it is 500-1000). Another important difference is in terms of the APR which is higher for the student credit cards. Again, this is to dissuade the students from defaulting on their payments. Moreover, a parent is generally required to co-sign or act as a guarantor for a student credit card. Thus the credit card company tries to cover its risk in all possible ways.
However, student credit cards are really good for students in more than one ways. The first obvious thing is that they are able to take advantage of benefits, which come along with the credit cards, much earlier in their lives. This includes things like being able to shop online, getting discounts on shopping, cash-back offers, ease of carrying a plastic as opposed to cash, etc. However, one very important benefit is learning how to use a credit card. Since most of the students are new to the world of credit cards, the student credit card is like a training ground for them to learn good habits and to understand the various benefits associated with credit cards. It is recommended that students go through various instructions etc that are supplied with the student credit card and understand them. These will not only help them in using their student credit card in the best way but will also help them when it comes to choosing a personal credit card at a later stage in their life. The lower credit limit and higher APR are in fact good in that sense (for training sake).
Another indirect benefit from student credit cards is the building up of credit rating. As we know, all credit accounts are reported to the credit bureaus that use the data to build and maintain a credit rating for the credit card holder. So a student credit card too contributes to credit rating. If used in the right way, a student credit card can help build a good credit rating for the student. Having a good credit rating even before you enter professional life is the best thing to happen. Besides the benefits related to faster processing of loans and mortgage applications, a good credit rating can also help get into a job (some employers check the credit ratings of the job applicants in order to gauge how responsible they are).
So there are tremendous benefits associated with student credit cards and it makes perfect sense for students to go for such credit cards.