Student Credit Cards: A Necessary Evil?

A lot of people, myself included, can trace years of indebtedness back to that first student credit card. After all, wielding credit cards when you’re 20 years old with limited or no income is a dangerous game. That said, student credit cards do serve a purpose: They help you build the credit history you’ll need later in life to get an auto loan or a mortgage. If you’re a full-time college student, only consider applying for a student credit card if you understand that you’re using the card to build credit—not earn rewards or borrow money.

Building Credit With a Student Credit Card

The good thing about student credit cards is that many (but not all) will approve applicants with no prior credit history as long as they are enrolled full-time at a recognized college or university. Especially in today’s tight credit market, getting that first loan or credit card to begin showing a responsible repayment history on your credit report is increasingly difficult.

If you do carry a student credit card, use it occasionally (it doesn’t even have to be every month), and always, always pay it on time, you’ll start to have a respectable credit score in a year or two.

Of course, student credit cards are a double-edged sword of course. If you rack up a debt you can’t pay or mistakenly miss a monthly payment, you’ll start your credit history off with a black mark that will last long after you’ve graduated.

The “Best” Student Credit Cards

Most student credit cards come with similar interest rates and rewards programs, and none of them are great. Students with limited credit are riskier customers, so credit limits start low ($500 or $1,000) and interest rates are high. But if you’re using the card to build credit, that shouldn’t matter. You’ll pay the card in full each time you use it.

Before applying for any credit product, however, do your homework. Don’t just mail in the first student credit card application some kid hands you along with a free frisbee the minute you walk onto campus.

You’ll want to make sure your card has no annual fee. It’s a bonus if they have rewards, but as a student you probably won’t (or shouldn’t) be spending enough on the card to make them count. Use a rewards card enough and you might earn a free meal every few months. Plus, it’s safe to say that a student credit card will not be your plastic for life. When you graduate (hopefully with good credit), you can choose a card with better terms and rewards that fit your new life.

That said, one credit card for students (and others new to credit) that is rising above the pack right now is the new Citi Forward Visa Card. There’s no fee, a 0% intro APR (not that you should use it as a student), and rewards program.

The card also rewards users for staying under the credit limit and paying on time with a 0.25% APR reduction for every three months of responsible use. Finally, there’s a limited time offer that gives you 10 points for every $1 spent in restaurants, book stores, video rental stores and more for the first three months, and 5 points per $1 spend afterward. Learn more about the Citi Forward Visa, or check out the Discover Student Card, another card with no fee and attractive rewards.

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• Six Things to Know About Your Student Loans
• Understanding Student Loan Grace Periods, Deferment, and Forbearance
• How to File a FAFSA as an Independent Undergraduate Student