As a college student, managing your finances wisely and building a strong credit history are essential steps towards a secure financial future. A student credit card helps in inculcating good financial habits at an early age. Enter the world of student credit cards – a specialized financial tool designed to meet the unique needs of young scholars. From helping you navigate your expenses and earn enticing rewards to nurturing financial discipline, student credit cards offer a plethora of benefits. In this comprehensive guide, we will delve into the nuances of student credit cards in India.
What is a Student Credit Card?
A student credit card is essentially a credit card tailored for college students above the age of 18, and unlike traditional credit cards, it does not require income documentation. These cards come with relatively low credit limits, usually up to Rs. 15,000, and have a validity period of five years. Moreover, joining fees and annual charges for student credit cards are either nil or significantly lower compared to regular credit cards.
Types of Student Credit Cards
In India, student credit cards can be categorized as either secured or prepaid. Secured student credit cards are linked to a fixed deposit account or an education loan account of the student, serving as collateral for the bank in case of default. On the other hand, prepaid student credit cards come preloaded with a specific amount of money, which can be used for transactions until it’s depleted.
How a Student Credit Card is different from regular credit card?
Student credit cards differ from regular credit cards in several ways:
- Lower Eligibility Criteria: Students do not require a steady income source or an impressive credit score to apply for a student credit card.
- Limited Credit Limit: Students can only spend up to the predefined limit assigned by the bank, which typically ranges from Rs. 5,000 to Rs. 15,000.
- Reduced Fees and Charges: Joining fees and annual fees are either waived or kept at a minimum for student credit cards.
- Fewer Benefits and Features: Premium services like airport lounge access, travel insurance, and concierge services are generally not available with student credit cards.
Eligibility Requirements for a Student Credit Card:
While eligibility criteria may vary from one bank to another, the general requirements for obtaining a student credit card in India are as follows:
- Indian Citizenship: Applicants must be Indian citizens.
- Age Requirement: The minimum age for applying is 18 years.
- Enrollment in a Recognized Institution: Applicants should be enrolled in a recognized college or university, either in India or abroad.
- Essential Documents: Applicants need to furnish identity proof (Aadhaar card, PAN card, passport, or voter ID), address proof (electricity bill, telephone bill, bank statement, or rent agreement), and education proof (admission letter, fee receipt, or mark sheet). While income proof (scholarship letter, stipend letter, or bank statement) is optional, having a fixed deposit account or an education loan account with the bank may also be beneficial.
Benefits of a Student Credit Card:
Student credit cards offer numerous advantages to students, such as:
- Building Credit History: Using a student credit card responsibly helps students establish a credit history and improve their credit score.
- Expense Management: Students can monitor their spending habits, set transaction limits, and effectively manage their finances.
- Savings and Rewards: Availing discounts, cashback, and reward points on various categories such as education, travel, shopping, dining, and entertainment enable students to save money.
- Emergency Funds: In times of unexpected expenses, students can utilize the interest-free period or opt for the EMI facility provided by certain student credit cards.
- Financial Discipline: Using a student credit card encourages financial responsibility by understanding its terms and conditions and avoiding late fees, interest charges, and penalties.
5 best Student Credit Cards in India:
As of now, several banks offer attractive student credit cards in India, each with distinct features and benefits. Some of the best ones include:
SBI Student Plus Advantage Credit Card: Annual Fee – Rs. 500
Key Feature – Using reward points to pay credit card outstanding bill, earning 1 reward point for every Rs. 100 spent.
ICICI Bank Student Forex Prepaid Card: Annual Fee – Rs. 199
Key Features – 40% discount on excess baggage and 20% discount on DHL courier service.
Paisabazaar Step UP Credit Card: Annual Fee – Nil
Key Feature – Providing 100% credit limit of the fixed deposit amount.
Kotak 811 #DreamDifferent Credit Card: Annual Fee – Nil
Key Feature – Offering a credit limit of up to 90% of the fixed deposit amount.
ICICI Coral Contactless Credit Card: Annual Fee – Rs. 500
Key Feature – Earning 2 reward points for every Rs. 100 spent.
A student credit card can be an invaluable tool for students seeking financial independence, responsible money management, and a pathway to building a strong credit history. However, it is essential for you to understand the associated responsibilities and risks. Timely payment of bills and avoiding accumulating debt, interest, and penalties are crucial aspects of using a student credit card wisely.
Additionally, you should compare different student credit card offerings to select the one that best aligns with your needs and preferences. Armed with this knowledge, you can make informed decisions and embark on a journey of financial empowerment during your college years.