If you’re headed off to college, you may be thinking about how you’ll manage your finances while you’re studying.
Perhaps you’ve considered a student credit card, but you’re not sure if it’s what you need. Plus, you’ve likely heard of all the crazy stories about students going away to school and ruining their credit due to credit card abuse.
At one point, credit card companies could totally set up a booth on campus and tempt unwitting students to complete credit card applications with things like free pizza and t-shirts. Fortunately, changes in legislation have prevented that practice, but it’s still all too common for college students to get into tight financial situations due to misusing credit cards.
This might scare you into thinking that you shouldn’t bother with a credit card at all. If you are not the most financially responsible person around, this is probably true. However, if you think you’d like to start building your credit and learn how to use credit cards responsibly, then a student credit card could help.
What’s Ahead:
What are student credit cards?
A student credit card is available to students whose credit profile and income qualifications make them eligible for a credit card. The good news is that the rules are somewhat relaxed for student credit cards—meaning you don’t have to make tons of money or have a mile-long credit history to be approved.
The downside is that the rates and perks are not always as competitive as cards for people with a more established credit profile. There are some student credit cards that allow you to have a cosigner in case you’re not yet eligible to have your own credit card.
You should still know that if you choose to apply for a student credit card you should most definitely be a student—even if the card issuer’s verification process and requirements seem relaxed. It is a federal crime, punishable by fines and/or jail time, to put false information on a credit card application.
Who should use student credit cards?
A student credit card is ideal for anyone who is a student and may not yet have an established credit score or a large amount of income to be approved for other types of credit cards.
If someone wants to start building a positive track credit record (credit history) sooner than later, a student credit could jumpstart that process. If you’re able to begin building a positive credit history at 18, 19 or even 20 years of age, then opening a student credit card could have an enormous impact on your credit score.
The reason being is that the age of your accounts factor into your credit score. Having older, seasoned credit accounts will help you have a better, higher credit score.
Don’t open a credit card if you can’t be responsible
Just like you can start building a positive credit history, early on, you can also begin building a negative credit history early on. For this reason, if you don’t yet feel like you will be responsible enough to handle a student credit card, it’s best not to get one.
Having to manage your studies and job prospects after graduation might be all that you can handle right now. You may not want the stress of managing a financial tool that could hurt you if not used properly. Credit card late payments and interest can add up quickly if you are not careful with your credit card usage.
How to find the best student credit cards
Sites like Money Under 30
You might be surprised to know that most major credit card issuers have student credit card products. A quick online search should produce plenty of results giving you guidance on how to find and choose the best student credit cards. Some sites even offer reviews and guidance on increasing your chances for approval for a particular company’s student credit card product.
Your parents
If you might require a cosigner for your student credit card, you can also check with your parents or potential cosigner to see if they already have accounts with cards that offer student credit cards.
Your bank
If you already have an account with a bank, you can check into offers there as well. It’s also good to know that many credit unions offer student credit cards with surprisingly competitive rates, too.
Important features to look for in student credit cards
Student credit cards there are a few terms and features that you should pay special attention to:
- Intro APR
- Annual Percentage Rate (APR)
- Annual fee
- Late fee
- Rewards and perks
APR
The APR tells you how much you are paying in terms of interest on balances that you carry on your credit card. Though APR and interest are the same, credit cards are required, by law, to state their interest rates in terms of APR.
Hopefully, you won’t be carrying any large balances on your card. By paying down your balance each month, you won’t pay large amounts of interest. But in the case that you do carry a balance, it’s best to have the lowest interest rate possible. For this reason, you should look for cards with lower APRs.
Intro APR
Some cards will have what is called an introductory or intro APR. This introductory rate is often set a 0% meaning that even if you carry a balance you will not have to pay any interest on that balance during the introductory rate term.
Introductory APRs usually have a set time frame like 6, 12 or 18 months.
Annual fee
Other terms you should look out for include the annual fee along with any late fees that will be charged if you do not pay your credit card bill on time.
Rewards
Premium credit cards typically offer rewards and perks.
For example, some cards offer cash back based on a percentage of what you spend on the card. Other cards may offer points based on your spending which can be redeemed for things like travel or credit statements.
Credit cards we recommend for college students
The Chase Freedom® Student Credit Card offers 1% cash back on every dollar you spend. You’ll also get a $50 bonus after first purchase made within the first 3 months from account opening. On top of that, there’s no annual fee, so you have nothing to lose if you rarely use it.
See card details/apply or read our full Chase Freedom® Student credit card review.
Discover it® Student Chrome
Discover it® Student Chrome offers 2% cashback on spending up to $1,000 per quarter. Then, Discover will match that cashback amount at the end of your first year as an account holder.
If you slip up and pay late, your first late fee is waived and there’s no penalty APR with the Discover it® Student Chrome.
See card details/apply or read our full Discover it® Student Chrome review.
Summary
When you’re a college student, you have to make a lot of decisions, including whether or not you want to use a credit card. If you can use a credit card responsibly, there’s no reason not to get a student credit card and start building credit.