Should I Get a Credit Card as a College Student?
Key Points About: Student Credit Cards
Credit cards can help college students build their credit history and establish their credit score
Having a credit card as a college student can help you pay for emergency expenses
A student credit card can lead to debt or a poor credit score if you don’t use your card responsibly
A credit card can be much more than just a convenient way to pay for expenses. A student credit card can provide peace of mind in emergencies, allow you to earn cash back or other rewards, and help you start building a credit history and get your first credit score. There are also risks to getting a credit card as a college student. It’s easy for credit card debt to get out of control.
Learning some of the benefits and drawbacks of getting a student credit card while you’re in college can help you decide whether getting a credit card is the best option for you.
What are the best kinds of credit cards for college students?
Many students don’t have a credit history, so the best credit cards for college students are usually ones that allow you to apply even if you don’t have a credit score.
Student credit cards
Student cards are geared toward the needs of college students. Student credit cards often require no credit history, and some may offer no annual fee. You’ll usually have to provide information about your college enrollment in order to qualify for a student card. Student cards often come with a lower credit limit than standard credit cards.
Secured credit cards
Like student credit cards, secured credit cards don’t usually require a credit score or credit history to apply. A secured credit card differs from a student card in that a secured credit card requires a deposit equal to your credit limit. When you use your card responsibly, your credit card company will usually return your deposit. You don’t have to be a college student to get a secured card, but they are available to college students.
Why college students should consider getting a credit card
From the time you begin using a new credit card, you’re building a relationship with your credit card company. When you use your card responsibly by paying your bills on time and keeping your balance low, the positive activity your credit card issuer reports to the credit bureaus helps you to build your credit history and start your first credit report and score. Then, when you’re ready to apply for a higher credit limit or a card with different benefits, your credit report and score will demonstrate that you have a track record as a good credit card customer.
Learning to budget
Having a credit card as a student can teach you powerful lessons about paying your bills on time and creating a budget. Using a credit card will require you to think ahead to your payment due date and create a budget to make sure you have the money available to make at least the minimum payment every month. Some credit cards allow you to track what you spend and organize transactions by type on their websites and mobile apps, so you can see where your money is going.
Earning cash back
Some student credit cards let you earn cash back rewards. For example, the Discover it® Student Chrome credit card allows you to earn 2% Cashback Bonus® at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically.1 Plus unlimited 1 percent cash back on all other purchases. The Discover it® Student Cash Back credit card lets you earn 5% cash back on everyday purchases at different places each quarter like Amazon.com2, grocery stores, restaurants, and gas stations, up to the quarterly maximum when you activate. Plus, earn 1% cash back on all other purchases – automatically. And don’t forget, neither card has an annual fee.
Paying for Emergencies
Cars need repairs. Computers need fixing. Smartphones get dropped. Life happens. It’s reassuring to know that in the event of an emergency, a credit card can help cover expenses. This benefit might help you — and your parents — feel a little more secure. Of course, you’re still responsible for the credit card bill that comes from these expenses, so make sure you reserve this type of credit card use for true emergencies.
Renting a house or apartment
Many rental applications require a credit check so that landlords can review the applicant’s credit history. Here again, student credit card use with a strong track record of repayment can help build a credit history and identify you as a responsible young adult and potential good tenant, helping to strengthen your rental application. When you’re ready to buy a home, a strong credit history will also be key to getting a mortgage.
Protection against fraud or loss
A credit card can help protect you against theft. If you carry cash and it’s lost or stolen, you’re unlikely to get it back. But if someone tries to steal your credit card or you lose the card, you’re protected against unauthorized use.
The Credit Card Act of 2009 says you don’t have to pay back more than $50 of unauthorized charges. The Discover $0 fraud liability protects you even more. You’re never held responsible for unauthorized purchases on your Discover Card.3
Drawbacks to student credit cards
While there are many benefits to having a credit card as a college student, it’s important to be aware of the risks.
Damaging your credit score and history
When you get your first credit card, it’s easy to lose sight of the fact that you have to pay for the purchases you charge to the card. As a busy college student, you might also miss the due date if you’re not used to managing regular payments. Late or missed payments can lead to a poor credit score, and it can take a long time to repair your credit history.
If you’re not able to pay your credit card in full by the due date, you’ll have to pay interest on the balance unless you have a 0% intro APR. Even if you have a low introductory interest rate, you’ll still have to pay the money back eventually.
Excessive credit card debt
Once interest starts accruing, credit card debt can increase quickly and become unmanageable. When you carry a balance, you usually lose the grace period that most credit cards offer for purchases, so interest is added to your balance from the date you make the purchase, rather than from your due date.
Your credit card issuer will compound interest daily, which means that interest is added to your balance at the end of each day, and the next day’s balance will include the previously added interest charge. When you don’t pay your balance in full each month, you pay interest on the interest charges.
How to qualify for a student credit card
In order to be approved for a student credit card, you’ll need to meet certain qualifications:
Be at least 18. In order to get your own student credit card account, you need to be 18 or older.
Demonstrate that you have enough income to pay the bill. If you’re between 18 and 21, you’ll need to have your own income to get a student credit card. If you’re 21 or older, household income that you have access to can be counted in your income on a credit card application.
Choosing the best student credit card for your needs
The best student credit card is likely to be the one that best matches your spending habits and doesn’t charge high fees. A student cash back rewards credit card can extend your budget by letting you earn cash back on your purchases. You may want to look for a student credit card with no annual fee, and to consider how much you can earn in rewards. If you travel internationally, you may also want to look for a student credit card with no foreign transaction fees.
Whichever student card you decide to get, building credit is easiest when you use your card responsibly.
With a positive credit history and a good credit score, you’re more likely to qualify for the best credit card terms in the future.
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