Student credit cards still follow the basic principles of any other credit card. It allows the credit account holder to borrow money from the bank on credit. A pre-arranged interest rate is then applied to any unpaid balance at the end of each month. However, there are some key differences between student credit cards and regular credit cards.

• Have a low credit limit: Since students have little to no credit history, the credit limit (the maximum amount of funds a lender will allow you to use on a credit line) on student cards is relatively low. This may work for a student’s benefit as it keeps them from getting into too much debt. Alternatively, a regular credit card’s credit limit is based on the account holder’s credit score, other credit lines, and outstanding debt.

• Are usually unsecured: A secured credit card is one that requires a minimum deposit in order to obtain. Student credit cards are almost always unsecured because applicants are expected to have little to no credit history. Other credit cards can be unsecured or secured depending on the perks and the account holder’s history.

• Offer limited rewards: Since lenders are taking a risk by offering credit to students with no credit history, the rewards of using the credit card often pale in comparison to the rewards offered by other cards. However, there are typically some incentives to get students to sign-up, like a low introductory APR or a small percentage of cashback.

• Have special benefits for students: in lieu of some benefits that other credit cards offer, student cards offer specific incentives geared towards students. For example, some student cards offer a credit statement for good grades or cashback on school supplies and books.

As a general comparison, student credit cards are geared to attract and benefit students, while other credit cards are aimed towards attracting the general public.