A student credit card is a fully functioning credit card that is simply geared to students who are new to credit. A student card offers a great way to move into the world of financial independence.

The benefits of a student credit card can include financial education and resources that are available online, via app or by phone; support in developing good payment habits, in the form of alerts and reminders from your credit card issuer; and cash back and other rewards that are specifically geared toward students. It all depends on the student card you get! Perhaps most importantly, lenders may grant lower limits to students that will allow you to start building your credit history.

Student credit cards can offer those benefits and more, but ideally work as part of a holistic approach to learning good money and credit management as a student, and during those crucial first few years after graduation. Here’s what students, parents and recent graduates might want to know when considering student credit cards and best practices:

    1. What is a Student Credit Card?
    2. How Does a Discover Student Credit Card Build Credit History?
    3. How to Choose a Student Credit Card 
    4. Another Starter Credit Option: Secured Credit Cards 
    5. Budgeting While in School
    6. Think Big Picture: Student Credit Cards Can Have Long-Lasting Benefits

1. What is a Student Credit Card?

Student credit cards are specifically designed for college students with limited credit history. They often have no annual fee, cardholder benefits and perks such as a rewards program.

A student credit card can help you build your credit history (if used responsibly). A good credit score makes you a more attractive applicant on a lease for a place to live, and can even affect your access to cell phone plans. If you need to take out a business loan, or a car loan, in the future, a bank will check your creditworthiness to ensure you’re a good bet to make payments, in full and on time. You stand to save in interest payments if your interest rate is lower due to your good credit.

Starting a credit history in college might benefit you in the future — but, just like toning muscles or learning to play an instrument, building a solid credit history takes time and consistency. With a student credit card, college students may begin to understand the concept of a credit limit and how much available credit they have at a given time, as well as not going over the credit limit. Using a student credit card allows you to create your own responsible bill-paying habits. Be warned that any irresponsibility on your part may be reflected in your credit score.

To obtain a student card, you will need to submit proof of full- or part-time schooling, you must be at least 18 years old with proof of income or assets, and any other criteria that the issuer needs to evaluate your application.

2. How Does a Discover Student Credit Card Build Credit History?

Credit card issuers offer a variety of student credit card options. One starter credit option to consider is a Discover student credit card. Among the many benefits of a Discover student credit card is that they let you earn cash back rewards in college while building a credit history to help you after graduation. That is, if you use it responsibly. All with No Annual Fee.

To start, make small purchases and be sure to pay your balance in full every month. By doing so, you not only avoid paying hefty interest charges and late fees, you also develop positive financial habits and may be able to build a healthy credit score. Those are just some of the benefits of a Discover student credit card. Here’s another: The seemingly small habits you start today when managing your student credit card can add up to big results over time, including helping you build an enviable credit history. Why is that important? For starters, having good credit can help you get the best terms and interest rates on any loans you may apply for down the road. It can also open doors for you (literally) when you’re looking for a place to live, whether you’re applying to rent an apartment or for a home mortgage. That’s something your future self will thank you for.

3. How to Choose a Student Credit Card

Choose one card that works for your situation and avoid signing up for additional lines of credit at every retailer you shop at. Signing up for multiple credit cards in a short period of time may have a negative effect on your credit score regardless of how responsibly you use them. Consider these questions before choosing a card:

Q: Do you have a scholarship or financial aid? Scholarship funding and financial aid checks often come in a lump sum at the beginning of a semester. If you trust yourself to keep your spending in check, this can provide an opportunity to earn a lot of points on a credit card that offers rewards or cash back. You can use the card and pay the full balance each month from your funds. Manage this well and you could have points to help pay for a flight home for the holidays depending on your redemption options. However, if you find you have a hard time managing your spending throughout a semester, you may be better off with a different card.

A: Consider a rewards card

Q: Are you working your way through college? Making ends meet and still making grades is a big challenge for most students who work part or full time while earning a degree. No one should sign up for a credit card with the intention of running a balance, but the reality of a working student is that there may be a month where an unexpected car repair forces you to carry a balance until you can pick up some extra shifts. A card with a low introductory -interest rate can help keep you out of financial trouble while you’re working toward your goals.

A: Consider a card with low introductory interest rate.

Q: Are you planning on studying, traveling or working abroad? Fees kick in when you’re overseas and handling money. For example, ATMs might charge extra fees to take out cash in a native currency. Foreign transaction fees are just what they sound like — fees levied when making transactions, meaning making purchases, when abroad. Some cards waive those fees. Others offer miles on hotels and airlines internationally, and some cards offer trip insurance should plans change

A: Consider a card with no foreign transaction fees.

Similarly, if you are heading off to an out-of-state college or university, that’s another reason to look into cards that offer airline miles and travel rewards. By accumulating miles on purchases, you could make it home for a visit sooner than you think

4. Another Starter Credit Option: Secured Credit Cards

If you’re no longer a student and you’d like to begin building credit history, a secured credit card may be an option. It also can be a way to bounce back if you are looking to rebuild your credit. You pay a deposit up front, which serves as your credit limit, and will cover the credit card company’s losses if you’re unable to pay your bills. If you demonstrate responsible credit management across all of your cards and loans, you may qualify for an unsecured credit card, or, in other words, a traditional credit card that does not require a deposit.

If you decide to apply for a secured credit card, you may want to choose one that reports to all three credit bureaus (Experian, TransUnion and Equifax). This will allow you to establish a credit history.

A student credit card, if you’re eligible, could be a better option since no deposit is needed. However, if you’re no longer in school, taking a pause in lessons, or you have damaged credit, a secured credit card could be the way to go.

5. Budgeting While in School

College is a time for learning and personal growth, and gaining control of finances is one of the tools students will need to learn as they start living more independently. Learning how to create a budget is essential for keeping track of the myriad expenses and sources of income that one can have during school. These simple tips can help you build the right college student budget that makes room for both fun and financial responsibility.

  • Track What You Spend. To begin creating your college student budget, have an idea of how much money you’re regularly spending, and what you’re spending it on. To get an accurate picture of your spending habits, you can track your spending for a prolonged period of time — say a month or more. With this information available, you can work to create a realistic budget that encompasses your actual spending habits instead of using guesswork.
  • Break It Down. Next, make a list of all of your sources of income in a given month. Be sure to include your average earnings from your job and/or work-study, money from parents or relatives, financial aid, and scholarships. Then categorize your regular expenses, separating them into buckets for things like housing, education costs, food, transportation, and entertainment.

Create your budget by deducting your essential costs first — housing, food, tuition, etc. Look at what money may be left over each month to plan your entertainment budget. While it’s important to include some funds to enjoy evenings out with friends, don’t forget to incorporate monthly savings into your budget, if you can. By putting aside extra money each month, you can prepare for any unexpected expenses that come up in the future.

  • Stick to It. Once you have your budget in place, it’s up to you to keep to it as best you can. Using financial apps like the ones mentioned above can help you keep your spending in check with regular updates and reminders about your progress. Of course, every month is different and your needs will change over time. To help make sure you maintain a realistic reflection of your spending habits and as a useful tool in your pursuit of financial responsibility, take time at the end of each month to revisit your college student budget. Use this time to identify opportunities for saving, account for changes in income, and continue developing your financial fitness skills.
  • Develop good habits. You can practice the habits that will help you “stick to it” as early as freshman year. Take textbook shopping, for example. Textbooks can cost north of $400 a year. Look online for used books. Try the library — maybe they have copies to loan. Instead of the campus bookstore, try off-campus used bookstores, especially if you are a literature major who might need to stock up on classic novels. See if you can share a book, and expenses, with a classmate. Some services offer to rent textbooks, another option. These creative solutions can pay big dividends in the form of money not spent during a college career, and might inspire some ways to address financial challenges once the cap and gown have been doffed.

6. Think Big Picture: Student Credit Cards Can Have Long-Lasting Benefits

As students transition out of school and into the workforce, many of those good financial habits that started, and continued, with managing a student credit card can also transition into good lifetime financial habits.

Here are a few ways to keep your good personal finance habits going:

  • Check your credit report. Pull your free annual credit report. Verify the accuracy of your name, address history, Social Security number, the accounts included in the credit report and the reported account activity. Make sure there are no mistakes on the report, like someone else’s debt on your account, that could bring down your credit score (it happens).
  • Review your credit like a lender. Creditors, lenders, landlords and employers may use your credit history to help estimate the financial risk you present. Good behavior, starting at age 18, is a solid beginning.
  • Invest in the Future. The future can seem light-years away when you’re still relying on financial help, but it will come eventually. Start making retirement contributions as soon as you land a job. The earlier in your life you can begin to save for retirement, the more time the money has to grow and the more options you will have later in life. Also, start saving when you can for an emergency fund so you have cash on hand as obstacles arise, a car emergency or a job loss.

Take the platform you’ve built with an early and solid credit history via that well-thought-out student credit card and turn it into a good apartment, low interest loans, and more money for future savings — you can start to see how it all lines up.

Published March 6, 2015.

Updated July 9, 2021.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.