Pros and Cons of Secured Student Credit Cards

Posted by Nick Niesen on October 29th, 2010

Many college, and even high school, students have a need for carrying a credit card. Often, however, these students are not yet financially responsible for themselves and still rely on their parents to help take care of their financial responsibilities. Therefore, secured student credit cards may be a great option for parents with children who are still in school. Nonetheless, the pros and cons of secured student credit cards need to weighed in order to determine if they are the right choice for you.

Pro: Secured Student Credit Cards Allow You to Monitor Spending

Secured credit cards are different from traditional credit cards in that you put funds on the credit card ahead of time. Therefore, the only money that is spent with the card is the money that is put on to it. In other words, a line of credit is not extended. Therefore, you don't have to worry about your child creating a humongous debt that you have to pay for.

In addition to preventing your child from going into debt, a secured student credit card also allows you to set your child up with an allowance. You can determine how much money you want to give your child to spend each month and you deposit the money onto the card. Depositing money onto these cards is easy. You can set it up so that a portion of your check is deposited onto the credit card each payday. Or, you can send money to the credit card company or deposit the money at select locations. This makes it much easier to get money to your child quickly if needed.

Con: Secured Student Credit Cards have a Number of Associated Fees

Although secured student credit cards allow you to monitor your child's spending habits, there are a number of fees associated with these guards. Generally, there is a fee to set the account up in the first place. Often, there are also annual fees and even monthly fees. In addition, each time you deposit money onto the card, you are usually assessed a small fee. All of these fees add up and can make the student credit card quite costly. Of course, these costs are still less then paying late fees or paying a large debt incurred with a line of credit.

Pro: Secured Student Credit Cards Provide Freedom and Flexibility

One of the best pros of credit cards for college students or high school students is that they allow your child to have the freedom and flexibility that is part of being a credit card holder. These cards do not look any different from traditional credit cards and are accepted at all of the same places. Therefore, your child can use the secured student credit card to purchases necessary items without having to ask you for it or making you have to go out and buy the item.

This is particularly helpful for college students when it comes to purchasing books and other school supplies, as the college may be located pretty far away from home. This makes it highly impractical for you to come to the school to make purchases for your child. Similarly, sending checks can take too long and can make your college student late in purchasing items he or she needs for school.

Pro: Secured Student Credit Cards Teach your Child Financial Responsibility

One of the best perks of a secured student credit card is that it starts your child down the road of financial responsibility. When you deposit money onto the card, your child has to learn how to responsibly use the money provided. In addition, most secured student credit cards report to credit bureaus, and the report will be in your child's name. This helps to build a credit history for your child, which will make it easier for him or her to acquire loans or other credit cards in the future. Before applying for a card, however, make sure it does report to these bureaus in order to receive this added benefit.