Must-knows before you get that student credit card

Here's a checklist you must know before signing up for such a card...

In India, the credit card market is expanding by leaps and bounds. Every week some bank or the other comes out with a new credit card to tap in on this growing industry. There is a card available for every type of customer according to the specific lifestyle requirements of each customer segment. There are credit cards which cater specially to women, to professionals (doctors), to travellers etc.

But, there is a segment of credit cards which is yet to be tapped by banks in India. Though popular in the west, the concept of student credit cards is still to catch up here.

However, times are changing fast and banks like SBI, Punjab National Bank, Andhra Bank and HDFC Bank have come up with student credit cards.

A student credit card is offered to students at college level (undergraduate or postgraduate) and has student-friendly features such as low interest rates, no income eligibility limit, no joining or annual fees, low cash limit etc. These cards have simpler joining formalities since there is no requirement of submitting employment forms or income tax returns. The only forms to be submitted include proof of residence and proof of enrollment in an educational institute.

Students who are above the age of 18 years are eligible for student credit cards. These cards are normally valid for a period of five years.

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1. Credit cards against fixed deposits

Generally, students are required to open a fixed deposit with the bank from which they wish to avail the credit card. Then, this fixed deposit fund is used to apply for the card. The credit limit of these cards is fixed up to the amount in the deposit.

A great example of this is the SBI Advantage Plus Card, which allows a credit limit up to 85 per cent of the deposit amount. It also extends very low interest rates of 1.99 per cent per month.

2. Add on credit cards

Another great and cheap way for students to own a credit card is by getting add-on cards on existing credit cards held by their parents or other members of the family.

The add-on cards will have the student's name and can be used as any other normal card. But the responsibility of bill payment lies solely with the parents for these cards.

Some banks allowing primary credit card holders to apply for add-on cards are:

1. Punjab National Bank -- The PNB Global Classic Credit Card, The PNB Global Gold Card

2. Andhra Bank -- Visa Gold card, Visa Classic Card

3. HDFC-Platinum Plus credit card, Women's Gold credit card

4. State Bank of India's SBI TATA Premiere Card, SBI Gold & More Card

Limitations

College life opens up a new world of freedom for students. While enjoying this freedom, sometimes students can be extravagant in the use of their credit cards and become spendthrifts. This can be dangerous as uncontrolled usage of student credit cards can make the students fall into a debt trap.

To avoid any such situations students should remember to be responsible while making purchases with cards. They should chalk out a well planned budget and try to remain within the it to avoid any unnecessary expenses. They should also make it a point to use the cards only to make important purchases and avoid impulsive purchases like expensive dresses or laptops.

If used judiciously, these cards are a great way to teach students early on how to manage their financials and build their credit history, which will help them in future.