How to avoid student credit card debt |

How to avoid massive student credit card debt

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Keep your student life carefree without snowballing debt.

You can develop your own line of credit and start building your credit score with a credit card, but with some risks. The danger credit cards can pose can be summed up in one word: debt.

How to avoid debt on your student credit card

  • Compare your options.

    Everyone has different spending needs. Compare cards with no annual fee, low APRs and student-specific credit cards to find a good fit. Note that some cards have minimum income requirements, paperwork requirements for international students and some may require a cosigner.

  • Take advantage of low interest rates.

    Save money by making and repaying purchases interest-free during 0% purchase APR promotions, which can last between 3 and 21 months. The standard interest rate will apply once the promotional period ends. For long-term card use, consider a card with a low ongoing purchase rate. This can be as low as 11%.

  • Stick to a budget.

    girl-studying-libraryCreate and stick to a budget. Also, try reducing your credit limit or leaving your card at home when you don’t need it.

  • Create a payment plan.

    Lower your interest costs and avoid debt by always paying off your balance in full, or at least as much as you can. If you don’t pay at least the minimum —around 2% of your balance amount — you’ll be charged a late payment fee, which can damage your credit score.

    Set up reminders each month to make repayments or set up autopay.

  • Resist using your card for everyday expenses.

    Consider reserving your card for costs you’ve budgeted for, or for emergencies. Use your debit card for everything else, like that slice of pizza you’ve been craving.

  • Avoid cash advances.

    Avoid cash advances such as ATM withdrawals, buying prepaid cards, gift vouchers or store cards. Certain bills and government payments, gambling transactions and banking charges are also viewed as cash advances.

    These transactions usually attract a cash advance fee between 3% and 5% and will immediately start collecting the cash advance interest rate — which can be as high as 28%. Cash advances also don’t collect reward points.

Our pick for a student credit card

Petal Cash Back Visa® Card

  • Up to 1.5% cash back after making 12 on-time payments
  • 1% cash back on all purchases - right away
  • No fees whatsoever. No late fee, international fee, annual fee, or any-other-kind-of-fee, fee.
  • $500 - $10,000 credit limits
  • No credit history necessary for approval
  • Build credit by using responsibly.
  • Petal reports to all 3 major credit bureaus
  • Petal's mobile app makes it easy to manage your money, track your spending and automate payments
  • See if you're pre-approved within minutes without impacting your credit score.
  • No deposits required.
  • Card issued by WebBank, member FDIC.
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Compare student credit cards

Name Product Filter values Purchase APR Annual fee Recommended minimum credit score
15.24% to 26.24% variable
Build your credit with no fees: Apply if you're new to credit or have a fair to good score.
20.99% variable
Designed for college students to build credit history and earn rewards.
25.24% variable
Designed to help build credit history with no deposit required. Apply if you're new to credit or have a fair to good score over 650.
17.74% variable
Credit card for professionals relocating to America without a US credit history.
0% intro for the first 7 months (then 16.74% to 26.74% variable)
Earn 2,500 bonus points after you spend $500 in purchases with your card within the first 3 months of account opening.

Compare up to 4 providers


Tips for clearing your credit card debt

If you’ve found this guide a little too late, here are some simple steps you can follow to help clear your credit card debt:

  • Pay more than the minimum. This way you’ll pay less interest. Paying off your balance in full is ideal.
  • Pay your high-interest debts first. This ensures you save on interest costs over the long term if you have multiple debts. Credit cards automatically direct your repayments towards the debt with the highest interest rate.
  • Make a 0% intro APR balance transfer. Consider a 0% intro APR balance transfer credit card so you don’t have to pay interest on your debt during the promotional period. After that, the standard interest rate applies. Use our repayment calculator to find out how much to put in each month to pay off your debt.
  • Negotiate with your credit card provider. Talk to your card company if you’re having difficulty making payments. They’re often open to discussion if you’re experiencing temporary hardship and may reduce or freeze interest fees, or agree to a more flexible repayment plan.
  • Seek help from a financial counselor. Financial counselors can provide free and confidential professional advice, which may be exactly what you need to start solving your money problems and prepare for the future.

Bottom line

Credit cards can be a great way to manage your finances while you’re studying. But they can plague you long after graduation if they’re mismanaged. Now that you know how to use a student credit card and avoid debt, you can check out our tips on how to successfully apply for a student credit card.

Frequently asked questions

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