You’re in college, and you’re in need of a credit card. But you’re not sure you have the credit history to get one. Besides, how do you know which card is the best one for you? Here’s everything you need to know about choosing a credit card and how to use a credit card as a student.
- What is a student credit card? The basics
- Tips on how to use a credit card as a student
- How to choose the right student credit card for you
- How to apply for a student credit card
- How to stay on top of your finances
What is a student credit card? The basics
Student credit cards are just what they sound like — credit cards designed for college students. Many of these types of credit cards are unsecured, so you don’t have to worry about putting money into an account with the issuer as collateral, though secured cards are also available. In that way, they are similar to traditional credit cards typically reserved for those with more experienced credit profiles.
Qualifying for a standard, unsecured card can be tricky. To access the best deals and rewards, you need to have already built up a credit score and history — and many college students just aren’t there yet. This is where a student credit card can help.
But just because student credit cards are easier to get than their standard counterparts, it doesn’t mean there aren’t some drawbacks. Not having much of a credit history means that students might receive higher interest rates.
On top of that, student credit cards often come with lower credit limits and usually fewer perks than what you see with standard credit cards.
Tips on how to use a credit card as a student
The main purpose for a student card is to boost your credit to the point where you can qualify for a standard unsecured card down the road and prepare for bigger money decisions.
As you use your student card, here are some of the things you can do to build the kind of credit history that will give you a solid start in your financial life:
Only spend what you can afford to repay
While navigating how to use a credit card as a student, it may be a good idea to spend only what you can pay off by the end of the month. Carefully budget your money so that you only buy what’s in your original plan. Credit cards shouldn’t be used for impulse purchases.
Trying to use a credit card as your main method of spending is an advanced money management technique that should wait until you have more financial practice. Keep purchases small, planned and occasional for best results.
Limit how many cards you open
Since you’re still at the point in your life where you’re trying to build your credit history, try to limit yourself as to how many credit cards you apply for.
Every time you open a new credit account, the lender will have to do a hard credit inquiry on your credit history. This, as opposed to soft credit checks, can negatively impact your credit score, especially if you haven’t been managing credit for very long. Instead, consider waiting until you’ve built up a more robust credit profile before applying for multiple credit cards.
Pay off the balance each month
When building your credit history, it’s not about how much money you spend. It’s also a demonstration on how well you pay back the money that you borrow. To improve your credit, try making your payments on time each month, preferably paying off the entire balance to avoid interest charges.
Use different tools to remind you to pay on time. Many issuers will send you text alerts to remind you to pay your bill. If you really want to make sure you don’t miss a payment, consider setting up automatic debits from your bank account to cover the required amount each month. Just stay on top of the situation so you don’t overdraft your account with autopay.
Keep your credit utilization low
Your credit utilization reflects how big your balance is compared to your credit limit.
When managing a credit card, try to keep your balance below 30% of your credit limit. For example, if you have a $1,000 limit, that means you want to avoid having a balance higher than $300 on your student credit card.
Of course, your limit is your limit. You can charge up to that amount, and, yes, you can conceivably carry up to 30% of your limit from month to month without seeing a negative impact on your credit score. But, keep in mind it can reduce your ability to build your best possible credit history.
Get help managing your money
When you manage your money carefully, incorporating your credit card spending into the overall plan, you are more likely to see good results with your credit history. Consider using these available tools to help you manage your money. These platforms — some of them are free — can help you with everything from setting a budget to understanding and managing your credit.
It may also help to have your parents play a role. That way, you can have a trusted person with credit experience help you manage your debt, spot red flags and help you make positive changes. However, don’t bank on your parents bailing you out of credit card debt.
How to choose the right student credit card for you
While there aren’t as many choices for student credit cards as there are for other mainstream credit cards, there are still a significant number of cards available. Deciding which student card will work best for you can be a challenging task.
Start by analyzing your spending and see what you’re spending the most money on. This may help you decide which cards offer the best perks for your lifestyle. For example, if you commute to school quite a bit using your personal vehicle, you may want to look for a credit card that offers rewards when you use it at a gas station.
You can also look for student-specific perks to offset the lack of more traditional rewards, such as systems that take into account your college GPA or the number of on-time payments you make. For example, the Discover it Student Cash Back card offers a $20 credit each academic year when your GPA is a 3.0 or above.
Some student rewards cards offer cash back, travel points and signing bonuses. However, these types of cards may be more difficult to get than cards that don’t offer these perks. Instead, you may want to focus on simplicity when deciding what cards to apply for.
If you already have a card or account with a bank or credit union already, that may be a good place to start when choosing a student credit card. Many lending and banking institutions offer student credit cards, and, by working with your current company, this can help make payments more convenient.
Student credit card vs. a secured credit card
As a student, you may be able to apply for student credit cards as well as secured credit cards. Student credit cards typically require that borrowers be full-time students, often have low borrowing limits and don’t require collateral or deposit.
Like student credit cards, secured credit cards can be a good option for those with little or poor credit. However, secured credit cards require collateral such as a vehicle or savings account. While putting down collateral can offer access to credit to those who might not otherwise get it due to their credit profile, if you don’t repay the credit card, the lender can take your collateral as payment.
How to apply for a student credit card
If you’re at least 18 years old (the age credit card companies typically require), below is a step-by-step process on how to apply for a student credit card.
- Research multiple credit cards to compare rates and terms. If you’re interested to see if you qualify for any, be sure to check if there’s an option to prequalify for a card. By doing this, you can find out if you’d be approved for a card without impacting your credit score as pre-qualification checks only do soft-credit pulls. A soft credit pull will not impact your credit score, unlike a hard-credit pull, which the credit card issuer will have to do if you decide to move forward with a card.
- Gather you basic contact information as well as personally identifiable information (PII), such as your social security number, your driver’s license and passport. Credit card issuers want this information in order to verify your identity.
- During the application process, you’ll have to prove that you’re a full-time student and have some type of income. Credit card companies need to be able to see that you’ll be able to repay your credit card when you use it. To prove that you’re a student, you may have to provide your student ID or university email address.
- Finally, you’ll need to wait for a response. You may either hear back via email or be sent a letter in the mail as to whether or not you were approved. This can happen on the same day, or can happen a few days after you’ve sent in your application.
How to stay on top of your finances
No matter which student credit card you choose, the important thing is to practice good financial habits. Figuring out a spending plan and sticking to it can help you build solid financial habits for years to come. Avoid buying more than you can afford with your credit card because, remember, you’ll eventually have to pay it back with interest. Have patience for yourself as well as you may be learning how to use a credit card as a student for the first time.
Keep in mind that your credit card is a tool. It can help your finances, but you could find yourself having financial issues with long-term consequences if not used responsibly. Don’t let that intimidate you from exploring how to build your credit, though, and setting your credit profile up for success down the road.
Interested in a personal loan?
Here are the top personal loan lenders of 2021!| Lender | APR Range | Loan Amount | |
|---|---|---|---|
 | 4.99% – 19.63%1 | $5,000 - $100,000 | |
 | 4.37% – 35.99% | $1,000 - $50,000 | |
 | 5.94% – 35.97%* | $1,000 - $50,000 | |
 | 99.00% – 199.00%2 | $500 - $4,000 | |
 | 5.99% – 24.99%3 | $5,000 - $40,000 | |
 | 7.99% – 20.88%4 | $5,000 - $50,000 | |
 | 9.99% – 35.99%5 | $2,000 - $36,500 | |
 | 10.68% – 35.89%6 | $1,000 - $40,000 | |
 | 9.95% – 35.99%7 | $2,000 - $35,000 | |
1 Includes AutoPay discount. Important Disclosures for SoFi. SoFi DisclosuresFor when we advertise static headline rates w/ all discount (i.e. autopay and money bundle) (NON PQ RATE): Fixed rates from 4.99% APR to 19.63% APR include a 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 11/2/2021 and are subject to change based on market conditions and borrower eligibility. SoFi Personal Loans are not available to residents of MS. Additional state restrictions may apply. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. Autopay Discount: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings, checking, or other account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings, checking, or SoFi Money account. Autopay is not required to receive a loan from SoFi. Direct Deposit Discount: To qualify for an additional 0.25% APR direct deposit discount you must: (1) set up autopay with SoFi Money within 20 days of the funding of your loan, AND (2) setup payroll direct deposits of at least $1,000/mo to SoFi Money within 35 days of the funding of your loan. If you do not set up autopay with SoFi Money within 20 days of the funding of your loan, AND set up payroll direct deposits to SoFi Money within 35 days of the funding of your loan you will not be qualified for this additional 0.25% direct deposit discount. Once qualified, you will receive this additional 0.25% direct deposit discount during periods in which you have direct deposits of at least $1,000/mo turned on with your SoFi Money account. This additional direct deposit discount will be lost during periods in which you have turned off direct deposits for your SoFi Money account. You are not required to enroll in autopay or direct deposits to receive a loan from SoFi. The Direct Deposit Rate Reduction excludes members from receiving the $100 SoFi Money® direct deposit promotional program. SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC. Member FINRA/SIPC. Neither SoFi nor its affiliates are a bank. SoFi Money Debit Card issued by The Bancorp Bank. For API partners when we return pre-qual offers only with all discounts (i.e. autopay and money bundle) plus direct payoff discount for those borrowers who select credit card payoff: Fixed rates from 4.99% APR to 19.63% APR include a 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 11/2/2021 and are subject to change based on market conditions and borrower eligibility. SoFi Personal Loans are not available to residents of MS. Additional state restrictions may apply. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings, checking, or SoFi Money account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi. Direct Deposit Discount: To qualify for an additional 0.25% APR direct deposit discount you must: (1) set up autopay with SoFi Money within 20 days of the funding of your loan, AND (2) setup payroll direct deposits of at least $1,000/mo to SoFi Money within 35 days of the funding of your loan. If you do not set up autopay with SoFi Money within 20 days of the funding of your loan, AND set up payroll direct deposits to SoFi Money within 35 days of the funding of your loan you will not be qualified for this additional 0.25% direct deposit discount. Once qualified, you will receive this additional 0.25% direct deposit discount during periods in which you have direct deposits of at least $1,000/mo turned on with your SoFi Money account. This additional direct deposit discount will be lost during periods in which you have turned off direct deposits for your SoFi Money account. You are not required to enroll in autopay or direct deposits to receive a loan. The Direct Deposit Rate Reduction excludes members from receiving the $100 SoFi Money® direct deposit promotional program. SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC. Member FINRA/SIPC.Neither SoFi nor its affiliates are a bank. SoFi Money Debit Card issued by The Bancorp Bank. If you selected credit card payoff as your loan purpose then your pre-qualified rate also includes a potential additional 0.25% Direct Pay discount. To secure this discount, you will need to select Direct Pay as an option to pay off your credit card and apply 50% or more of your loan proceeds directly to your creditors. 2 Includes AutoPay discount. Important Disclosures for Opploans. Opploans DisclosuresDirect Deposit required for payroll. Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.
3 Includes AutoPay discount. Important Disclosures for Payoff. Payoff Disclosures
4 Important Disclosures for Citizens Bank. Citizens Bank Disclosures
5 Important Disclosures for LendingPoint. LendingPoint Disclosures
6 Important Disclosures for LendingClub. LendingClub DisclosuresAll loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 9.56% and a 5.00% origination fee of $300 for an APR of 13.11%. In this example, you will receive $5,700 and will make 36 monthly payments of $192.37. The total amount repayable will be $6,925.32. Your APR will be determined based on your credit at time of application. The origination fee ranges from 2% to 6% (average is 4.86% as of 7/1/2019 – 9/30/2019). In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,001 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer. 7 Important Disclosures for Avant. Avant Disclosures*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state. **Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33. Based on the responses from 7,302 customers in a survey of 140,258 newly funded customers, conducted from August 1, 2018 – August 1, 2019, 95.11% of customers stated that they were either extremely satisfied or satisfied with Avant. 4/5 Customers would recommend us. Avant branded credit products are issued by WebBank, member FDIC. * Important Disclosures for Upgrade Bank. Upgrade Bank DisclosuresPersonal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/. |
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