Build credit as a college student. Learn how using a college student credit card can help build credit, help you in a jam, and other benefits. Find the advantages of student credit cards.

When one pays for college, it is important to note that tuition is not the only cost. There are several costs involved with college, including for books and student fees, food, rent and other necessities. For many students, credit cards can actually help pay for additional costs. Groceries and books are among the common items that students use their credit cards to purchase. This frees up money from student loans to pay housing costs and student fees. However, student credit cards should be used carefully and regular payments should be made to keep the balance down.

Beyond college costs, though, there are other advantages to student credit cards.

Establishing credit

One of the most important things you can do for your personal finances is to begin establishing a credit history. A credit history is your financial reputation. Your credit score is based on your credit history, and it helps a variety of people determine how responsible you are likely to be. Here are some of the ways that your credit score is used:

• Consumer credit. If you want a consumer loan, for a car or for furniture or some other consumer item, the lender will check your credit score. The higher your credit score, the better your interest rate will be, and the better your other loan terms will be.
• Mortgage loan. The most important thing that you can have when you buy a home later in life is a good credit score.
• Insurance. Many auto and life insurance companies check your credit score to help determine your premiums.
• Landlords. Some landlords want to check your credit score in order to determine how likely you are to make your rent payments on time and in full. In some cases, you can be denied an apartment if you have a low credit score.
• Employers. Even employers check your credit score in some cases. In security companies, or if you are applying for a position working with money, employers want to be sure that you are not susceptible to bribes to pay off debts, or that you are an embezzling risk.

One of the easiest ways to establish credit and get a credit score is to get a student credit card. Student credit cards make it easy for you to begin a credit history. You get a small loan, and if you make regular, on time payments, it will reflect well in your credit history. Additionally, since student credit cards are often the first loan that young people receive, it has the advantage of providing a longer credit history, which also reflects well in your credit history.

Emergency source of funding

There is always the possibility of an unforeseen emergency expense. Student credit cards can be a safety net in some cases. While it is always better to have an emergency savings account at a bank, in some cases, college students find it difficult to save meaningful amounts of money for an emergency fund. A credit card can be a good source of emergency funding.

However, it is important to remember that a credit card is not actually income. It is a loan. And, quite often, a credit card interest rate is rather high. So, even though a credit card with an available line can provide you with peace of mind, it is important to do all that is possible to pay back the borrowed amount as soon as possible.

Rewards programs with student credit cards

Another advantage to student credit cards is the ability to actually gain financial advantages. Many credit cards have rewards programs that you can take advantage of. If you live far from home, it can be helpful to have a credit card that lets you build up travel miles to reduce the cost of airfare. Other student credit cards allow you to earn points to help you buy consumer items, or even get cash back.

One student credit card, from Citi, offers a rewards program just for students. College students can receive points that they can use for rewards by doing things like making on time payments, maintaining a high grade point average and making every day purchases.

It is important to remember, however, that interest charges can destroy the value of rewards programs for student credit cards. One of the best ways to garner financial rewards from student credit cards is to only buy items that you would purchase anyway, and that you have money for already. That way you can pay off your balance each month, without incurring interest charges.

Student credit cards can have several advantages. However, it is important to use your credit cards wisely, or the advantages are swallowed up by disadvantages that can have lasting effects on your financial situation.