A credit card can be much more than just a convenient way to pay for today’s college expenses. It can provide peace of mind in emergencies, be a fun way to accumulate rewards and cash back, and be a useful tool to help college students establish life-long good financial habits.
Of course, these are changing times and many might be reconsidering what it even means to be a college student going forward. Beyond the perks of credit card rewards and counting points, students may be wanting peace of mind and trust in who they get a card from; security from identity theft; and easy to use mobile features.
So wherever your educational journey leads you, consider these six reasons to have a credit card:
- Building a Credit History
- Avoiding Fraud and Identity Theft
- Learning to Budget
- Earning Rewards and Cash Back with No Annual Fee
- Handling Emergencies
- Renting or buying a house or apartment
Build a Credit History
It’s common to want to only use your student credit card for smaller expenses in the beginning, but understand that you are building a relationship with your credit card company that shows other credit issuers that you are reliable and responsible. It can be a good idea to pay your bills on time and in full, and keep your balance low. That way, when you’re ready to apply for a higher credit limit or a card with different benefits, you’ll already have a track record as a good credit card customer. The free Discover credit scorecard shows you an overview of your credit in seconds.
You Can Help Avoid Fraud and Identity Theft
Worried about some scammer stealing your hard-earned cash and trashing your good name? Well, paying with a credit card makes it easier to avoid fraud and monitor unauthorized purchases. Discover Freeze it® allows you to stop any purchases on your card if you lose it or suspect something suspicious. Discover also offers free Social Security alerts as another tool to monitor fraud.
Learn 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 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. Learning the skills of budgeting and scheduling bill payments may help you later in life when you’re managing bigger dreams and likely, more money.
Enjoy Rewards and Cash Back
Certain credit cards allow you to earn rewards, points or cash back for a variety of things. For example, the Discover it® Chrome card for students allows you to earn 2 percent cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically, plus unlimited 1 percent cash back on all other purchases. Another option includes the Discover it® Student Cash Back card, which allows you to earn 5 percent cash back at different everyday places each quarter like grocery stores, restaurants, gas stations, rideshares and online shopping (Amazon.com, Walmart.com, PayPal and more), up to the quarterly maximum each time you activate. Neither card has an annual fee.
You Can Handle Emergencies
Cars need repairs. Computers need fixing. Smartphones get dropped. Life happens. It’s reassuring to know that in the event of a real emergency, a credit card can cover expenses. Students can pay for unexpected medical or dental expenses, or even rent a car with a credit card. This benefit might help you — and your parents — feel a little more secure.
Renting or Buying a House or Apartment
Most rental applications require a credit check. A student credit card with a strong track record of repayment can help 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.
Originally published July 13, 2015.
Updated July 20, 2020.