Credit cards were once a coveted member of the 5Cs in Singapore. The reasons are clear–– they are a common and convenient payment method for most, especially in the advent of online shopping. On top of that, they offer rewards, cashback or even airmiles for your expenses, which further stretches the value of every dollar spent.
However, there remains a segment of the population that are unable to reap the benefits of spending with credit cards–– students. Students are automatically ineligible because they cannot fulfill the basic income requirement for a credit card.
As a result, most students apply for student credit cards or even supplementary cards (from their parents or legal guardians).
What is the difference between the two? In this article, we find out how these two types of cards are distinctly different from each other, despite their perceived similarities and requirements.
#1 Choice Of Cards
When it comes to the choice of credit cards available, students tend to get the shorter end of the stick. Currently, there are only seven card issuers, namely DBS, Citibank, Diners Club, CIMB, Bank of China, Standard Chartered and Maybank, that issues student credit cards in the market.
However, the same cannot be said for supplementary card. In fact, the sky’s the limit when it comes to the choice of cards. As long as the primary cardholder is eligible to apply for the card, students are able to take advantage and apply for a supplementary card tagged to the crediting account. All they need is to simply request for a supplementary card from their parents or guardians.
Compared to mainstream credit cards, most student credit cards offer benefits that are on the lower par as compared to the usual credit cards on the market. For instance, some student credit cards offer a flat cash rebate of between 0.25% and 0.3% (the highest being 1%) on any eligible spend on the credit cards. This is lower than the usual cash rebate of at least 1.5% offered on the typical cashback credit cards.
Issuers of student credit cards will often make up for the gap with other privileges that appeal to the younger demographic. These include longer periods of fee waiver or affordable card membership fees, as well as merchant perks which range from free entry to nightclubs, or exclusive discounts at selected fashion labels.
On the other hand, supplementary cardholders can enjoy the full merchant benefits accorded to primary cardholders provided by the bank. One disadvantage, however, is the fact that any points and cash rebates that are awarded for transactions spent on these supplementary cards are credited back to the principal cardholder.
#3 Credit Limit
Student credit cards are tailored specially for students with a reduced and manageable credit limit. The limit is usually pegged at $500. In addition, card applicants who are below 21 years of age will require consent from their parents to be eligible for the card. Hence, the risk of non-payment of debt is rather low.
On the other hand, supplementary cards are tagged to the primary card account holder’s credit card limit, although some card issuers do accord the primary cardholder some flexibility and discretion in determining the credit limit for the supplementary card.
#4 Building Credit History
Credit cards are a double-edged sword; it can either make or break you. That is why it is important to manage credit wisely and prudently by spending within one’s means and always making a point to pay any outstanding credit card bills in full before the due date, which goes towards building a good credit history for oneself.
Student credit cardholders can tap onto this advantage. As long as cardholders are prompt in their payment, cardholders of such cards can enjoy a head start in building their credit history even before they are eligible for a mainstream credit card. A good credit history would also mean a smoother application process for other loans and lines of credit in the future, such as housing loans or personal line of credit.
On the other hand, supplementary cardholders do not get such an advantage, as their supplementary cards are tied to the main account holder and not registered under the name of the supplementary cardholder. Hence, for those who would want to start building credit history, they may wish to consider using student credit cards instead.
Whether it is a student credit card, or a supplementary credit card, one thing for sure is the need to use credit wisely. Therefore, it is always wise to only spend what you can pay off in full each month and to keep your credit utilization low by prioritizing responsible usage and not earning rewards.