A student credit card is the best option for college students who want to build a credit history.
Student credit cards are tailored for young adults who may have little or no credit history and need to establish their credit. These cards sometimes even come with excellent perks like rewards and promotional interest rates.
In this student credit cards guide, you’ll learn what to look for in a student credit card, discover what you need to qualify for a student credit card, learn the critical mistakes to avoid when you’re using a student credit card and get answers to common questions about student credit cards.
Compare student credit cards
The best credit cards for students will help you start to build good credit. High school students at least 18 years old will need a co-signer if they don’t have a steady source of income. Credit cards for college students between 18 and 21 years old can include secured cards and retail credit cards. Compare your options to find the best card for you.
What to look for in a student credit card
Many teenagers’ first credit card will be a student credit card. Not every credit card with the “student” label is actually good for students. It’s important to compare student credit cards so that you choose the best student credit card to help you build better credit and not get you into debt.
All credit cards come with certain features that affect the pricing and benefits of the credit card. Your goal with a student credit card is to pay as little as possible for the convenience of using the credit card. Here’s what to look for as you choose the best student credit car.
- Low or no annual fee. It’s common for student credit cards to have a small annual fee, so you don’t have to rule out a card because it has a fee. Consider also that many student credit cards don’t charge annual fees. If you’re wondering whether to apply for a student credit card that has a reasonable annual fee, consider the card’s other features to decide if the card is worth the cost.
- Low APR. The APR, or annual percentage rate, affects the amount of interest you pay on balances that you carry from month to month. Your credit card will have a grace period during which you can pay your balance in full and avoid paying any interest. Any balance left unpaid after the grace period will be subject to interest charges based on the APR. The higher your APR, the higher your interest charges will be.
- Promotional APR. Some student credit cards offer an introductory promotional APR on purchases or balance transfers or both. During this promotional period, which must last at least six months, your balances will be subject to a lower APR. Many credit cards offer a 0% promotional rate, which means you’ll pay no interest during the promotional period, even if you don’t pay your balance in full.
- Rewards. Student credit cards with rewards pay cash, points, or miles on your purchases. When you evaluate the rewards on a student credit card, look for any limits on the amount of rewards you can earn or expiration on rewards. Ideally, you can accumulate an unlimited amount of rewards that do not expire.
- Signup bonus. Many student credit cards with rewards also offer a signup bonus that pays a lump sum of rewards if you make a certain amount of charges within the first few months of having the credit card. While signup bonuses are certainly attractive, you must consider whether you can meet the spending requirement without charging more than you can afford to pay back.
- Other perks. Some student credit cards may come with additional perks, like purchase protection and extended warranty, that make the credit card stand out from the rest. Consider these additional benefits with the other pricing and rewards features to choose the best card.
Special benefits for students
While a student credit card isn’t necessarily easier to be approved for, there are some special benefits offered that can make them more valuable to students.
- Good grade bonus. Certain credit cards, such as the Discover it® card, make an effort to reward customers with good grades. If your GPA is 3.0 or higher, you can get a small annual bonus in your account. You will have to make a request for this bonus, submit your GPA, and you will receive the bonus in 30 to 60 days.
- Better rewards for common student purchases. Make sure to keep records of all your school expenses. Common purchases such as books, pens, calculators, laptops, etc. can earn you extra bonuses. One of the cards that offers this is the Citi ThankYou® Preferred Card.
- Financial tools and advice. Most credit card companies offer information on how to get started building credit and what to consider for planning your finances. This is a great way for you to learn how to manage your finances during college and after graduation.
Credit cards for high school students
Getting an early start on building your credit rating is an excellent way to set yourself up for financial success. Having a good credit score can open a lot of doors once you graduate, such as apartment and car loan approval, lower insurance rates and better credit cards with more benefits.
While federal law prohibits anyone under 21 from getting a credit card, there are a couple of exceptions to this rule. You can get your own credit before you turn 21 if you are at least 18 and you can prove your ability to pay off your card.
You have a steady source of income. Having a steady source of income shows that you’ll be able to repay any money you borrow.
You have someone co-sign. If you’re able to find someone to co-sign with you, that will ease the lender’s concerns about receiving payments owed because the co-signer will share in the financial responsibility with you.
If you don’t have time for a job and are unable to find a co-signer, there is still another way to get a credit card. A family member or friend can add you to their credit card account as an authorized user. As an authorized user you are not financially responsible for the debt and your use of the card might not affect your credit history. Not all credit card providers report authorized users to the credit bureaus.Back to top
Credit cards for college students
Since the Credit CARD Act of 2009 set 18 as the minimum age you can open a credit card, it’s more difficult to get a credit card for college students to get a credit card. College credit cards are a great introduction to the world of finances and credit, but it can be difficult to find the right one. For college students who want to start building up their credit, once you hit the 18 age mark, more options will open up for you.
Like high school students, college students can get a credit card with a steady source of income or getting someone to cosign. Getting an on-campus job or part-time job can prove to lenders that you can pay off your credit card balance without any problems.
Secured credit cards vs. student credit cards
Secured credit cards are another good option for college students. You typically don’t need any credit history to apply for a secured credit card, which is why they’re perfect first-time cards for college students. Secured credit cards require a deposit that acts as your spending limit and backs your credit card as collateral for lenders in case you can’t pay back your card. Your card could also graduate when you do — some secured cards can be upgraded to unsecured cards when your credit score is high enough.
If you can’t qualify for a student credit card or want a lower spending limit, a secured credit card is a good option for college students.
Student credit card fees
Besides any annual fee, most other student credit card fees are avoidable. Knowing which fees your credit card charges can help you use your credit card in a way that minimizes the fees you pay.
- Late fee. A late fee is charged to your account whenever you fail to make at least the minimum payment by the due date. The first time you’re late, your fee can be a maximum of $25. If you’re late again within the next six months, your credit card issuer can charge up to $35. A late payment can also trigger your APR to increase.
- Returned payment fee. If your bank returns your credit card payment, for example, because you don’t have sufficient funds in your account or your bank account is closed, your credit card issuer will charge a returned payment fee. The fee can be up to $35, depending on your credit card terms. You can avoid a returned payment fee by making sure you’re paying from the right bank account and that you have enough funds in your account to cover the payment.
- Balance transfer fee. A balance transfer is a type of transaction where you move the balance of one credit card to another credit card. Most credit cards charge a fee of about 3% for transferring your balance. Because the balance transfer fee is a percentage of the balance transfer amount, you pay more when you transfer larger balances.
- Cash advance fee. Your student credit card may give you the ability to withdraw cash from an ATM. In addition to paying an ATM fee, you’ll also have to pay a cash advance fee that’s a percentage of the amount of the withdrawal. Some student credit cards will also charge a fee for cash equivalent transactions, which include purchasing a money order or using your credit card for a wire transfer.
- Finance charges. Any balance that you don’t pay before the end of the grace period is subject to interest in the form of a finance charge. The finance charge is calculated based on the balance that you’ve carried forward and your credit card interest rate.
- Foreign transaction fee. Using your credit card to make purchases in a foreign currency or with a company that uses a foreign credit card processor will often result in a foreign transaction fee. You might be charged this fee if you use your credit card while traveling internationally or you place an online order with a company that’s not located in the United States. The foreign transaction fee is often 3% of the amount of the transaction.
- Over-the-limit fee. Similar to an overdraft fee on a debit card, some student credit cards may charge a fee when your balance exceeds the credit limit. For credit card issuers to charge this fee, you must have first opted in to having over-the-limit transactions processed. If your credit card issuer charges an over-the-limit fee, you can avoid it by opting out of over-the-limit transactions. You can also avoid the fee by checking your credit card balance frequently to be sure new purchases won’t put you over the limit.
Best way to use a student credit card
Using a student credit card responsibly is the best way to build a good credit score and avoid getting into credit card debt. Here are some guidelines on how you should use a student credit card. Remember, the credit card habits you establish now will make a difference in your credit for years to come.
- Charge only a small amount to your credit card each month. Your student credit card will have a credit limit, which is the maximum amount your credit card issuer allows you to charge on the credit card. You should never charge the full credit limit no matter how large it is. That’s because your credit score benefits you when you only use a small amount of the credit available to you. This proves to lenders that you handle your spending limits responsibly. Charging a small amount also protects you from getting into debt.
- Pay your balance on time and in full each month. Your credit card issuer will charge a late fee of up to $35 if you don’t make at least the minimum payment on your credit card by the due date. Paying your balance in full isn’t required on a student credit card, but it’s a good habit to stay out of debt and build a good credit score. Forcing yourself to pay in full will help you keep your credit card purchases at a level that you can afford.
- Avoid loaning your card to friends. Loaning your credit card to someone isn’t like loaning them $20 cash. Your credit card holds far more purchasing power and there’s always the chance that your friend will spend more on your credit card than you agreed to. You’re ultimately responsible for purchases made on your credit card.
- Understand fees. Before missing a payment or making a cash withdrawal, understand the extra costs. You’ll be able to make better decisions if you know how much it will cost you.
Mistakes to avoid with student credit cards
When you’re starting out with credit cards, you want to set yourself up for success. That means avoiding critical mistakes when you’re using a student credit card.
- Getting too many cards. After you’re approved for the first student credit card, you may be tempted to apply for additional credit cards to raise your purchasing power. However, the more credit cards you have, the greater potential to get into debt. Multiple credit cards means multiple monthly credit card payments to manage. To start, getting just one student credit card is the best option for most young adults.
- Applying without a reliable source of income. You can’t expect to be able to make your monthly payment without a regular source of income, e.g. money you earn from a job. Without the funds to pay your credit card balances, you risk falling behind on your payments and hurting your credit score.
Worried making a mistake with your college credit card will ruin your credit score? Don’t be. Chances are your credit card company can fix small mistakes for you. Call your bank and ask them to waive the annual fee. If you missed your payment this month, show your bank you can pay it off now and ask them to remove any interest charges. If your bank hasn’t increased your credit limit in the last year and you always make full payments, ask them to increase your limit. This will improve your credit score and help you increase your borrowing limits over time.Back to top