Credit card companies are churning out variants of cards at a very fast paced. There are so many product variations that at times it can be confusing for one to decide which card to apply for. The aggressive marketing processes add to the woes. The prospect gets overburdened with the information on different cards to the extent that rather than having a clarity, this over doze of information makes one confused. The features and benefits on one card do not match with the other and this complicates the decision process even more complex.

We come across variety of queries from students on which card should they apply for? What would be the best card for them to choose from?

Let us understand this better. As far the credit cards go, they undoubtedly are the first credit instrument for most of the individuals. However, even for a smaller limit card, the bank would want to check the repayment capacity. And since the students do not have a regular source of income, their application does not go through.

Well, it does not mean that the students cannot possess a card which is a great product that comes with a long list of benefits. Following are the two options that are available to the students.

First, get a supplementary card from one of the parents.

Second, get a secured credit card.

Supplementary card

Here the primary card holder gives the permission to utilize a part of his credit limit to the supplementary card holder. The repayment obligation rests with the primary card holder and in case of any payment related issue, it would have an impact on the Credit Profile. A lot of students are extended this option by their parents as the first step to expose them to credit. Since the parent would have knowledge of all the charges, it becomes easier for them to keep a track and guide the child.

Secured credit card

This product variation does not need the applicant to show regular income history. The bank keeps a deposit under lien and in case of any default the collateral is revoked to recover the outstanding amount. Since the limit is restricted to a max of 90% of the deposit, the banks are more less than often able to recover the complete amount.

This product variant also comes with its own benefits. It is just like any other card and can be utilized for any kind of charge on the plastic. The biggest benefit is that the students’ credit history would start getting build. Since it is an independent card in the name of the student and gets reported to the credit bureau, it impacts the credit profile positively if the repayments are made in time. But a word of caution, in the even of non payment, the student may find himself in a situation where he would be looking out for personal loans without CIBIL check when he starts to work.

Conclusion

For the beginners a vanilla card shall be preferred. Rather than looking to select the best card that would be able to extend maximum benefits, the students should look at leaning the tricks on how to manage the cards. This is something critical and will go a long way to help them understanding the nuances on how to manage credit and credit profile.

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