You’re in college, and you figure you need 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?
If you don’t know where to start, getting a student credit card can be a good beginning. Here’s everything you need to know about choosing a student credit card and using it to build your financial reputation.
What is a student credit card?
Student credit cards are just what they sound like: credit cards aimed at college students. These credit cards are unsecured, so you don’t have to worry about putting money into an account with the issuer as collateral. In that way, they are similar to “regular” credit cards.
However, qualifying for a standard unsecured card can be tricky, according to Sarah Hollenbeck, a credit card expert with deal site Offers.com. To access to the best deals and rewards, you need to have already built up a credit history — and many college students just aren’t there yet. This is where a student credit card comes in.
“Banks recognize that students are just starting to make bigger purchases and build credit, so they don’t require such a long credit history to approve you for a student card,” Hollenbeck said.
But just because student credit cards are easier to get than their standard counterparts, it doesn’t mean there aren’t some drawbacks. “Realize that a lack of credit history also means that students might see a higher interest rate,” Hollenbeck said.
On top of that, pointed out Matthew Coan, the owner of credit card comparison website Casavvy.com, student credit cards often come with lower credit limits.
And while some student cards come with perks, there are usually fewer rewards opportunities than what you see with standard credit cards. “Most student credit cards just aren’t going to offer 0% APR and balance transfer opportunities that the mainstream cards offer,” Coan said.
Use a student card to build your credit
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, according to Alex Cohen, CEO and cofounder of Birch Finance.
“A credit card is both a tool for personal growth in financial responsibility and a sign to lenders that you’re financially trustworthy,” he said. “They’re a great vehicle for learning financial responsibility and developing good spending habits.”
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:
First of all, said Cohen, it’s important 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.
“Use the card only occasionally so you avoid spending more than you can pay,” said Jason Steele, a credit-card expert with Credit.com. He pointed out that 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.
Pay off the balance each month
When building your credit history, it’s not about how much money you spend. “Your credit score is basically a grade on how well you pay back money that you borrow,” said Coan. He recommended making your payments on time each month, preferably paying off the entire balance to avoid interest charges.
Steele suggested using tools available to remind you 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, he proposed 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. “Many student cards have limits no bigger than $1,000,” said Hollenbeck. “That limits how much debt you can get in, but it also means you have to be careful about how much you charge.”
Coan said your best credit-building results come when your balance is kept below 30 percent of your credit limit. When 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. But it can reduce your ability to build your best possible credit history. And, yes, you can conceivably carry up to 30 percent of your limit from month to month without seeing a negative impact on your credit score. But all of the experts interviewed for this article agreed that your finances will be in better shape if you just pay off the total balance in every billing cycle.
Get help managing your money
When you manage your money intelligently, incorporating your credit card spending into the overall plan, you are more likely to see good results with your credit history, said Steele. He recommended using available tools to help you manage your money. These platforms can help you with everything from setting a budget to understanding and managing your credit:
- Personal finance software such as Mint or Personal Capital
- Credit and money management tools from your credit card issuer or bank
Steele also said it helps to have your parents play a role. “Have a parent or other trusted adult log into the account from time to time, just to check things,” he said. “They can see if it’s being managed well, spot red flags, and help you make positive changes based on what they observe.”
How to choose the right student credit card for you
While Cohen acknowledged 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.
Cohen suggested starting by analyzing your spending. “Look at your past purchases to see which areas you spend the most money on,” he said. “Your past spending habits will help you figure out which cards have the perks you’re looking for.”
Hollenback advised looking 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.
“Since student cards have higher interest rates, it’s important to take advantage of all the other reward opportunities you can,” she said. “Plus, a cash incentive for your grades can help you do well in school while building your credit from the ground up.”
Steele said that there are student rewards cards that offer cash back, travel points, and signing bonuses. However, they might be harder to get than cards that don’t offer these perks. He suggested on focusing on simplicity when deciding what cards to apply for.
“It can help to get a card issued by the same bank or credit union you already have a checking or savings account with,” he said. “That way, payments become simply a matter of transferring funds between accounts. Besides, many of these institutions offer student cards with lower interest rates and management tools that help you learn good financial habits.”
5 student credit cards to help you get started
Now that you have an idea about some of the strategies for using a student credit card, let’s take a look at which card might be right for you. Check out these five cards recommended by the experts:
Discover it® Student chrome
If you’re looking for an all-around card that offers student-based perks on top of more-standard rewards, then Coan suggests the Discover it® Student chrome as a good choice. This card comes with such perks as:
- Intro APR of 0% for 6 months on purchases, then a 12.99% - 21.99% Variable APR applies
- No penalty charged on your first late payment
- 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases – automatically.
- For new cardmembers, a dollar-for-dollar match on all the cash back earned at the end of your first year, automatically
On top of those features, the Discover it® Student chrome comes with a $0 annual fee and doesn’t charge foreign transaction fees.
The card also comes with security features that Coan likes. “You have the option to freeze your account if you lose your card,” he said. “Discover will also monitor your Social Security number and alert you if anyone is trying to use it to obtain credit elsewhere.”
Citi ThankYou® Preferred Card for College Students
Hollenbeck recommends the Citi ThankYou® Preferred Card for College Students as one that offers some decent rewards — even if they aren’t quite on par with other Citibank cards meant for customers with more credit experience. Some of the perks that Hollenbeck likes include:
- Intro APR of 0% for 7 months on Purchases* on purchases, then a 16.49% - 26.49%* (Variable) APR applies
- Earn 2,500 bonus points after spending $500 in purchases within the first 3 months of account opening
- Earn 2X Points on Dining Out & Entertainment and Earn 1X Points on All Other Purchases
You don’t have to worry about an annual fee with this student credit card, said Hollenbeck, but you do have to deal with a foreign transaction fee of 3%, making this card less than ideal for those who decide to study abroad.
Journey Student Rewards from Capital One
While the Journey Student Rewards from Capital One doesn’t come with the same level of rewards as some other student credit cards — and you won’t get a 0% APR offer — Steele likes its money and credit management tools, such as access to credit monitoring tool CreditWise. The card also features:
- 1% Cash Back on all purchases; 0.25% Cash Back bonus on the cash back you earn each month you pay on time
- Higher credit limit after making your first five payments on time, terms apply.
This card does come with a higher interest rate on purchases than some of the other student cards. However, Steele says this could be an advantage since it might encourage students to pay off their balances in full each month, especially with the card’s emphasis on money-management tools. Plus, the card has a $0 annual fee, and you don’t have to worry about foreign transaction fees when you leave the country.
Bank of America® Cash Rewards Credit Card for Students
The Bank of America® Cash Rewards Credit Card for Students comes with:
- Intro APR of 0% for 15 billing cycles on purchases. A 15.49% - 25.49% Variable APR applies, thereafter.
- Intro APR of 0% for 15 billing cycles on balance transfers. A 15.49% - 25.49% Variable APR applies, thereafter.
- 3% and 2% cash back on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, 1% on all other purchases
On top of these perks, Steele points out that the Bank of America® Cash Rewards Credit Card for Students comes with access to your FICO score, updated monthly. You can look at key factors impacting your score to help you make better decisions. Plus, there is a $0 annual fee, though unfortunately for students traveling abroad, there is a foreign transaction fee of 3% of the U.S. dollar amount of each transaction.
Chase Freedom® Student credit card
The Chase Freedom® Student credit card offers a $50 sign-up bonus after making their first purchase on the card within the first three months.
Like other cards suitable for students, the Chase Freedom® Student credit card has a $0 annual fee. However, there is a foreign transaction fee of 3% of the amount of each transaction in U.S. dollars.
Staying on top of your finances
No matter which student credit card you choose, the important thing is to practice good financial habits. Figure out a spending plan and stick to it. And avoid buying more than you can afford with your credit card.
Remember: Your credit card is a tool. It can help your finances, but it can also be a disaster if not used responsibly.
The information related to Discover it® Student chrome, Citi ThankYou® Preferred Card for College Students, Journey Student Rewards from Capital One, Bank of America® Cash Rewards Credit Card for Students and Chase Freedom® Student credit card has been independently collected by Student Loan Hero and has not been reviewed or provided by the issuer of this card prior to publication.
Interested in a personal loan?Here are the top personal loan lenders of 2020!
|Lender||APR Range||Loan Amount|
|5.99% – 19.16%1||$5,000 - $100,000|
|7.98% – 35.99%||$1,000 - $50,000|
|7.99% – 35.97%*||$1,000 - $35,000|
|99.00% – 199.00%2||$500 - $4,000|
|5.99% – 24.99%3||$5,000 - $35,000|
|7.99% – 29.99%4||$7,500 - $40,000|
|7.99% – 20.88%5||$5,000 - $50,000|
|15.49% – 35.99%6||$2,000 - $25,000|
|10.68% – 35.89%7||$1,000 - $40,000|
|9.95% – 35.99%8||$2,000 - $35,000|
|1 Includes AutoPay discount. Important Disclosures for SoFi. |
2 Includes AutoPay discount. Important Disclosures for Opploans.
Direct 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.
4 Important Disclosures for FreedomPlus.
5 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
6 Important Disclosures for LendingPoint.
7 Important Disclosures for LendingClub.
All 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.
8 Important Disclosures for Avant.
*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 Disclosures
Personal loans made through Upgrade feature APRs of 7.99%-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/.