Credit cards work by allowing customers to borrow money against a credit and paying back the same at a later date. However, misusing credit cards or not using them judiciously will result in customers getting tangled in a web of debts. But using the same in a financially intelligent manner will result in a lot of benefits. It will also increase that individual’s CIBIL score. However, parents seem to believe that credit cards in the hands of their children will result in reckless spends and hefty bills. On the contrary, this can actually enable students to learn financial responsibility. Additionally, credit cards meant for students, come with a host of benefits and features and allows them to start building their credit record from early on. There are a number of credit cards in the market that cater to students. Credit cards are provided to those who are above the age of 18 and are pursuing their graduation and the documentation required is quite minimal. The necessary documents are proof of age, address and their ID card from college. Two categories of mastercards are available, secured visa cards that are provided against their fixed deposit accounts and add-on cards.
Secured Credit Cards These cards are provided against fixed deposit accounts and the fixed deposit account will act as the credit line. 70%-85% of the fixed deposit amount will be the credit limit. This ensures that spends do not go completely out of hand. The annual fee is also quite low and provide attractive rewards such as cashback at grocery and department stores, waiver on fuel surcharge, points when they shop online. Banks that provide secured credit cards for students in India are State Bank of India, HDFC Bank, ICICI Bank and Axis Bank. Add-on cards Add-on cards allow students to procure all benefits of a primary cardholder without the responsibility of paying as one. The primary cardholder is generally a parent and a limit can be set on the add-on cardholder’s credit limit. The primary cardholder can also keep a track of all the transactions made on that card. Add-on cardholders should ensure that they remain within 30% of the limit that has been provided to them to ensure that their spends are being made judiciously.