Student credit cards have obvious benefits for those in school. They offer convenience for purchases and allow students to finance expenses like textbooks over time for example. But student credit cards also benefit the credit card companies. It might sound counterintuitive for credit card companies to offer new cards to students, who in many cases aren’t earning a significant full-time income while in school. Yet it happens, and students can actually be an attractive customer base for these credit card companies to target.

Today let’s look at what the appeal of student cardholders is for credit card companies.

3 Reasons Students Are Attractive Potential Cardholders

Here are three of the main reasons credit card issuers want to appeal to students, especially when they’re looking for their first credit card:

1.    Consumers are known for being loyal to their first credit card company. The card they start building their credit history with is one they’ll likely keep for a long time (so their credit file continues to reflect the length of that credit history, making them appear to be a less risky borrower in the future). By making some credit cards available to students who might be in the early phases of building their financial future, credit card companies have a chance to get that “first in” status, securing a long-term loyal customer.

2.    Students are also less likely to be loaded with other credit card and loan debts (other than perhaps student loans). With fewer debts and financial commitments than other potential cardholders, students are an appealing market for credit card companies. That’s not to stay students are a more appealing market than those who might apply for higher limit credit cards with a solid credit history, but rather that it makes them another group worth pursuing.

3.    Even though many students only work part-time while getting an education, credit card companies know that when they graduate they’re likely to earn significantly more. In other words, they’re banking on a student’s future income more than being concerned about their current income. Of course a student would still have to have a regular income coming in. They would just apply for something like the ANZ First Visa which is tailored to their needs with a lower credit limit to account for the greater risk, but also a lower income requirement for approval.

Those are just a few of the more common reasons credit card companies make student credit cards available. But keep in mind that the attraction companies have to a student market doesn’t mean they’ll hand out credit cards like candy. Students also need to understand that they’ll probably have to settle for a lower credit limit on their new credit card than someone with a good credit history built over several years. All credit cards have their own approval criteria, and a student has to meet them just like anyone else.