Credit card usage is popularly used across India to make various purchases and transactions on credit. However, the concept of student credit card hasn’t yet formed its ground throughout the country. One obvious reason is, students, don’t have a necessary income to repay their credit bills on time and hence they rarely avail one.
However, because of increasing demands for cashless transactions, several financial institutions now offer student credit cards.
Features of a student credit card
There are few basic features which are uniform among the various student credit cards available in the Indian financial market –
- Lower credit limit: The credit limit on these cards are limited and lower compared to regular credit cards. Most financial institutions offer a maximum limit of Rs. 15000.
- No joining fee: Student credit cards have no joining fee. They also have minimal annual charges to reduce the burden on the student, making it simple to maintain.
- Period: The validity period on these cards are relatively longer than a regular credit card. At most, any financial institution would validate the card for 5 years.
- International usage: As the target demographic for these cards are primarily the students studying abroad. Therefore an essential feature of it is to ensure its international legitimacy.
- Reward points: Akin to regular cards such as a Bajaj credit card, these credit cards also have the facility of reward points, however limited. They allow and bind the students to use the amount for limited purposes.
- Minimum documentation: These credit cards require minimal documentation to apply. Lenders only require identity proof, address proof, proof of admission in a recognised university, etc.
Benefits of student credit cards in day-to-day life
Using a credit card from an early stage in life has many benefits that can help that student make reliable and informed financial decisions in the future. There are already reasons why an individual is smarter with a credit card in his/her pocket.
The benefits for a student using a credit card in day-to-day life as well as otherwise are as following –
- Convenience: When students stay abroad for their education, there are several expenses which might arise in the course of their stay. Even though parents disburse funds regularly, such funds might exhaust. At times of emergency, it is fruitful to have a credit card handy. Also, few lending institutions provide a breakdown of the expenses made through a student credit card which helps the student map his/her spending habits.
- Building a credit score: With the availability of such a card, an individual has the opportunity to develop a credit score from a young age. If the student can follow up on all the necessary stipulations, it will set the course for a good score which will help in his/her future financial endeavours.
- Responsible: Using a credit card makes students more responsible regarding their expenditures. As the students can monitor their spending and repay, thereby, they become more financially responsible.
- EMI conversion: In case a student spends more than what they can repay at once, they can convert that into an EMI. This way, it would be convenient for them to repay their credit card bills.
- Credit card conversion: As and when a student graduates from studies and has a source of income, he/she can convert the existing card into a regular one such as a Bajaj card. This offers the edge of a longer credit history, which leads to a healthier credit score.
- Availing loans: As they have developed a credit score for a considerable period, it becomes much more convenient for them to avail loans once they graduate.
NBFCs like Bajaj Finserv provides pre-approved offers on credit cards which makes availing them easier and faster.
Tips to use a student credit card
There are always ways how you can use a credit card wisely; be it you are a working adult or a student.
- Making timely repayments of your dues will improve your credit score.
- Use a credit card to make payments at the beginning of each billing cycle. This way, you have a bigger window to repay without incurring any interest on the amount spent.
Also, when students use student credit cards in day-to-day use, it is wise to not go reckless with it as it would defeat the purpose of availing that card in the first place and place students in further debt.
Students can optionally avail feature-rich credit cards such as the Bajaj Finserv RBL Bank SuperCard with the help of a co-applicant and enjoy its numerous benefits and offers.