November 4, 2024 · 10 mins read
Santosh Kumar
Credit cards have long been viewed as a financial benefit only viable for entrepreneurs. But, as the standard of living increases, working employees, and even students, can now apply for a credit card.
The primary requirement of a student credit card is the applicant's creditworthiness. This is reflected by their CIBIL score, which should be 750 or above. A healthy credit rating will simplify credit card, loan, and mortgage approvals. It also helps the applicant to get favourable terms in loan installations & credit repayment.
The same stands for student credit cards. Using a student credit card responsibly will build a positive credit rating for the applicant during their formative years.
Banks have strict requirements when it comes to student credit cards. If you are an undergraduate or graduate and want to apply for a credit card, read this article to know more.
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Student credit cards come with additional features that are geared toward students who do not have a source of income. Benefits include student-centric rewards, low credit limits, waiver of annual fees, and cashback offers.
Student credit cards help you improve your creditworthiness, which means they are available to students who do not have an income source or credit history.
But, the parent's CIBIL score is considered. Depending on the student's age and parents' income, student credit cards may require a co-signer.
To obtain a student credit card, the applicant should be above 18 years old and have a healthy CIBIL score.
You will also need to furnish proof that you have sufficient access to income to clear your credit card bills. Learn more about what income you can show in your application to get a student credit card from the particular issuer.
Once you have the basic qualifications, it is time to check your credit rating. This credit rating reflects your creditworthiness and determines how much credit limit and interest rate you qualify for. Applicants with a poor CIBIL score or no credit history at all may have applied for a secured credit card with a co-signer. There are also chances of application rejection. That being said, some student credit cards can be obtained even with a low credit rating.
You can check your credit score on UPI apps or during a formal application. Once you receive your report, make sure to check for any errors or information you do not recall. There may be instances when your credit report contains errors, outdated info, or even fraud transactions that negatively impact your score. Raise any grievances with CIBIL immediately in case of fraud or error.
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There are many credit card offers online. Research well and compare different options before applying for one. Different financial providers have different rewards in various spending categories, which helps applicants to choose the right option.
There are lucrative cashback rewards on top brands which can be used again to earn discounts and save money. A well-researched approach will give you the advantage of applying for a credit card with favourable terms at your convenience.
You will find many FinTech companies, in addition to banks, offering student credit cards with favourable terms online. This means you have a plethora of resources at your disposal. Check all student credit card offers and apply for the most beneficial option.
Most student credit cards are instantly approved within minutes if the applicant meets the minimum guidelines. An online application will take minutes to apply if you have all documents in digital format. If you are taking the offline route, like applying in person or via phone call, you must furnish the following documents:
1. Proof of Identity (Aadhaar or PAN Card)
2. Proof of Address
3. College Admission Letter
4. Proof of Enrollment, like a College Identity Card
5. Recent Passport Photograph
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Ensuring eligibility for a student credit card will result in a hassle-free application process. The issuer mostly has relaxed guidelines for qualification. For instance, students do not have a credit history, & the creditworthiness of the applicant will not be taken into consideration. That said, you must still meet other basic requirements before accepting your application.
Here are the requirements for student credit cards:
1. Applicant must be 18 years of age or older
2. The applicant must be a student at a college or a university to get a student credit card
3. The applicant should have a student ID
The issuer may set forth other requirements. Certain student credit card providers may require the parents or guardians to open a fixed deposit account of a minimum sum. This fixed deposit acts as security in case of a payment default.
Other institutions may demand a Savings Bank Account with a minimum quarterly amount. Some banks also issue student credit cards to education loan holders.
Student credit cards often carry relaxed eligibility concerning credit scores and proof of income. These reduced criteria are designed to help students with their emergency financial needs during their education.
You can apply for a credit card in India using the following methods:
You can apply for a student credit card if you have a savings bank account with a minimum monthly average amount. The minimum monthly average required differs from one bank to another.
You can apply for a secured student credit card if you have a fixed deposit account in your name. Once again, the issuer bank may require you to have a certain fixed deposit amount to be eligible for a student credit card.
Certain banks offer student credit cards to applicants who have taken an education loan from them. These student credit cards offer flexibility to the student in repayment terms and interest.
You can apply for an add-on credit card as a student if anyone in your family has a credit card. Such families may be parents, siblings, or any other blood relative. The primary cardholder must have a positive credit history for the add-on card to be issued.
Various state governments have launched student credit card schemes for students' benefit. These cards are aimed at providing a stress-free educational period for the student financially.
Read More:: How to Check CIBIL Score in Paytm
A student credit card helps students achieve financial independence at a young age. In most cases, a student credit card will be approved if the applicant furnishes proof of repayment. However, knowing the requirements like minimum age and required documents can make the difference between an application being approved or disapproved. If you are applying for a student credit card, be ready with the following documents:
1. Identification Documents: Be ready with copies of your Aadhaar card & PAN card.
2. Photo Identification: Carry or submit online your latest passport-sized photographs for valid photo identification.
3. Student Enrollment Documents: Other documents like College ID, or a marksheet for proof of enrollment in a college or university.
4. Proof of Repayment: Finally, you will also have to show proof of income or guarantor details to prove repayment capacity.
Once you have received your card, it is essential you adopt best practices for wise financial management. Do not use your card frequently, as it may indicate greed for credit and lower your CIBIL score.
1. Credit Building: Student credit cards enable students to build credit from an early age. By utilising credit smartly and repaying timely, their credit score will positively build and help them obtain loans and mortgages in the future.
2. Financial Backup: Students may be in need of money on an emergency basis to buy books or pay lab fees. A student credit card acts as a financial backup and provides peace of mind to students.
3. No Joining Fee: As these cards are designed for students with no source of income, student credit cards have no annual or joining fee.
4. Rewards: Student credit cards offer several reward points on purchases in specific categories. With these reward points, they can earn further discounts and cashback benefits.
5. Learning Financial Management: A student credit card inculcates wise spending habits and practices. Students can learn financial management from an early age by learning how to plan finances with debit and credit payments.
6. Upgrade Option: Student credit cards also come with an upgrade option. Once you pass out of a college or a university, you can apply to upgrade your student credit card into a regular credit card.
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Student credit cards hold many benefits for students who do not yet have a source of income. Student credit cards help you learn financial independence and financial management from a young age, which are necessary skills you take to your adult life. Credit cards, especially designed for use by students, can also help them fund their educational pursuits while allowing them to handle finances and learn about credit systems to become financially responsible. It also allows them to foray into the world of credit, help them understand the basics, and build a relationship with lenders, banks and financial organisations. It helps them understand the financial world while slowly working their way upward to build a solid credit system that will be very beneficial for them in the long run.
What are the disadvantages of a student credit card?
Student credit cards have disadvantages like lower credit limits and higher interest rates. There may also be fewer rewards as compared to regular credit cards. Do your research well before applying for a student credit card.
What are the advantages of a student credit card?
The advantages of a student credit card are student centric reward system, lower rates of interest and waiver on credit card maintenance, as well as annual fees depending on the issuer.
What are the eligibility criteria for a student credit card?
Unlike other credit cards, student credit cards have minimal eligibility criteria, the most common being the age and required documents that show their affiliation with any educational institution.
Is a good credit score required for acquiring a credit card?
No, typically, an individual doesn't need to have a good credit score to acquire a student credit card. These are generally tailor-made for young individuals starting out their credit journeys, and a credit score isn't considered in such cases.
Is a student credit card free of interest rates?
No, a student credit card is not free of interest rates. It may have a subsidised rate of interest, but it generally has an interest rate specific to the issuing bank or credit card issuer.
What maximum loan amount can be availed through a student credit card?
Normally, a loan of up to 10 lakhs can be availed through a student credit card from any bank.
Can we make purchases like laptops and other gadgets using a student credit card?
You can use a student credit card to purchase gadgets like laptops. It is up to the cardholder and their preference to make purchases.
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