Student Credit Card Frequently Asked Questions

Student Credit Cards

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Frequently Asked Questions

Credit Card 101

A credit card is a card that allows you to borrow money (or credit) to pay for your purchases. You later have to repay the credit card company for what you borrowed, plus any interest that accrues on the purchased amount.

Generally, debit and prepaid cards can’t help you build a credit history.

 

When you use a debit card, you are accessing funds in your bank account. This is regardless of whether you use it at the ATM, at a store, online, or even via the telephone.

While debit cards and credit cards look similar and allow you to have a wide range of shopping options, they are different. A debit card pulls directly out of your bank account. If there are no funds in your account and you attempt to use your debit card, you will either receive an overdraft fee or your card will be denied.

 

When you use a credit card, you are borrowing money from the credit card issuer. You will be sent an itemized bill for everything you purchased at the end of the billing period. You have the option to pay the minimum payment, any amount over the minimum payment, or the full amount by the due date.

A billing cycle is a period of time between billings. A billing cycle is recurring and usually on a monthly basis. A credit card company will summarize all the purchases you've made in that cycle and send you a bill for the total amount at the end of the cycle. Any amount not paid in full by the due date becomes part of your next billing cycle. If your credit card offers a grace period during which you don’t pay interest on purchases, you will usually lose the grace period if you don’t pay your balance in full each month. This means that not only will the card issuer charge you interest on your unpaid balance, but new purchases will accrue interest as soon as they post to your account. Carrying a balance into your next billing cycle will also affect how much you can spend, since you may not exceed your credit limit.

A minimum payment is the smallest amount you can pay on your credit card bill to avoid late fees and remain in good standing.

 

Imagine you received your credit card statement that included expenses from a weekend road trip, and find out that you owe $400. If you make the $50 minimum payment by the due date, your payment will be considered on time and you would now only owe $350 from the trip. Since you didn't pay the full amount, you would owe interest on your remaining balance charged at the annual percentage rate (APR). As you make more purchases, that amount will be added to your outstanding balance along with interest that accrues.

 

If you pay less than the minimum, or make the payment after the due date, your payment will be late and you may be charged a late fee.

Your balance is the amount of money you owe to the credit card company. Each purchase adds to your credit card balance, along with any interest or fees. When you make a payment, your balance will decrease.

 

  • If you used your credit card to spend $200 on groceries and gas, you would then have a $200 credit card balance.
  • If you decided to pay $80 back to the credit card company the following day, your new balance would be $120.
  • If you carry this $120 of debt into your next billing cycle, you will be charged interest. For example, if your credit card APR is 20%, then your daily periodic rate would be .05479452054%-your APR divided by 365 days. Depending on how the credit card company calculates interest, this could mean that the first day you accrue interest, your new card balance will be $126.52. Your interest is calculated each day on your total balance, after new purchases are added and payments are subtracted.

Interest is the cost of borrowing money. Let's say you borrow $200 dollars to buy a concert ticket to see your favorite artist, and this debt has a 10% monthly interest rate.

 

  • The first month you will be charged $20 (200 x $0.10). That $20 is added to your original debt, so now you have $220 of debt.
  • The second month you are again charged 10% interest, which now comes out to $22 (220 x 0.10). Now you have $242 of debt.
  • As you can see, this will add up quickly if you don't pay your debt off on time.

 

For credit cards, the interest rate is stated as an Annual Percentage Rate, or APR.

For credit cards, the yearly interest rate is stated as an Annual Percentage Rate (APR). The APR determines what percentage is used to calculate the interest you owe on unpaid balances. Some of the best credit card options come with an introductory APR., which may allow low or no interest charges for a set amount of time upon account opening.

Credit cards for college students work best when you make purchases you’re sure you can pay off. In fact, you can avoid paying interest on student credit card purchases if you have a grace period by entirely by paying off your entire student card balance due on your monthly statement in full and on time every month. You’ll still enjoy all your rewards and other student card benefits without paying interest charges. Note you will pay interest if you take any balance transfers or cash advances.

An annual fee is a fee that may be charged on a yearly basis for maintaining a credit card.

Your credit score is a vital part of your finances and can help you secure competitive interest rates, as well as funding for home, auto, or personal loans. 90% of top lenders use FICO® credit scores, including Discover.1 Your FICO® credit score is based on five elements:

 

  1. Payment History (35%). Paying your bills on time is essential to keeping your score healthy.
  2. Amounts Owed (30%). This is considered as your credit utilization ratio. This is determined by dividing how much credit card debt you owe on all of your credit cards by your credit limit total on all cards. A good rule is to keep this number under 30%. For example, Person A can have a small debt amount of $500, but if they only have one credit card with a credit line of $1,000, then their debt to credit ratio is 50%-too high. Person B can have $5,000 in credit card debt, but if they have a combined credit limit of $25,000 over several cards, then they have a healthier credit utilization ratio of 20%.
  3. Length of Credit History (15%). Once you open a card, stay in good standing with the account to build a credit history.
  4. Credit Mix (10%). This shows that you can handle multiple types of debt, such as a credit card, a mortgage, and a student loan.
  5. New Credit (10%). Applying for several new credit cards in a short time period will negatively affect your score, especially if your credit history length is short.

 

Remember that payment history and the amount you owe make up 65% of your credit score. With regular, responsible use of credit and consistent payments, your credit score may steadily go up.

A cash advance means using your credit card to get cash from an ATM or a bank, moving cash from your credit card to your checking account, or cashing a convenience check. Essentially, you're borrowing cash from your credit card account instead of using your credit card to make a purchase.

A credit bureau is a company that collects information about your credit history, and makes it available to lenders (including credit card companies), employers, landlords, banks and others.

Your credit line is the total amount you can spend on your card, whereas your available credit indicates the remaining amount of credit in your credit line, less the amount you already borrowed.

 

For example, imagine you have a $1,000 credit line and just bought a $300 furniture set. Your available credit would then become $700. You can find out how much credit line you have on your statement, or in your account center at Discover.com. Or you can call us here. 

Income is only one piece of information we'll consider when evaluating whether or not someone qualifies for a student credit card. And if you're 21, you can include another person's income if it's available to you. If you're under 21, you can consider another person's income if it's regularly deposited into your account.

The answer may depend on if you're in college. The best student credit card is usually one without an annual fee. Each credit card issuer has different criteria when deciding whether a college student qualifies for a student credit card and generally doesn't require the same kind of credit history or income they would for a standard consumer card. The best credit cards for college students also come with rewards on every purchase and top benefits like being able to track your credit score over time.

 

If you're not a college student and are using credit cards for the first time, you may consider a secured credit card that requires a security deposit if you're not approved for an unsecured credit card. Secured credit cards offer a tool for non-students to build good credit and establish their credit history. Building a good credit score is essential for qualifying for ultimate rewards cards with a higher credit limit, purchasing a home, and even securing a better rate if you refinance your student loan.

About Discover Student Credit Cards

Discover Student credit cards can help you build your credit history and earn cash back rewards on purchases.

 

Your credit history helps inform your credit score. This credit score helps predict how likely you are to pay back the borrowed credit. Companies use credit scores to make decisions in offering a credit card, car loans, mortgages, or other credit products.

 

When you graduate, call us to update your income and personal information such as your income, housing, e-mail, and address. Updating this information may make you eligible for credit line increases.

All Discover student credit cards offer cash back rewards. You earn Cashback Bonus® as a percentage of the money you spend on your credit card. For example, Discover it® Student Chrome earns 2% Cashback Bonus® at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. 3 If you charge $50 in gas on your Discover it® Student Chrome card, you’ll get $1 in cash back rewards.

 

After you've earned cash back rewards, you can redeem them as bank deposits, statement credits, gift cards to popular retailers, and more.

 

Although the Discover Student Cash back card isn't a travel rewards credit card, one benefit is that you won’t pay a foreign transaction fee. A foreign transaction fee is an additional fee that some cards charge on credit card purchases overseas. Using the Discover Student Cash back card means you won't see any hidden fees on your backpacking trip or study abroad semester.

 

There are 5 things you need when applying online:

 

  • Be at least 18 years of age
  • Have a U.S. address
  • Have a Social Security number
  • Provide all the required information requested in your Discover application
  • Show proof of education

While Discover doesn't share the minimum credit score required to get approved for a Discover student credit card, we do consider information other than credit scores in student credit card applications. We're excited to offer two of the best credit cards for students to start building their credit histories.

After Getting Your Discover Student Credit Card

Whether you're brand new or already have some credit history, a Discover student card lets you earn great rewards while building credit with responsible use.2

While the concept of "building credit" may sound like a lot of hard work, it's a fairly simple process. These are ways to build your credit responsibly:

 

  • Make all payments on time
  • Either pay your balance in full, or try to pay more than your minimum each month
  • Avoid carrying a balance-meaning you pay your balance in full and on time each month-in order to avoid paying interest on purchase.

Discover offers many easy ways to let you make a payment on your account:

 

a. Log into your account center and click "Make a Payment"

 

b. Set up Direct Pay to make automatic payments in the amount you choose each month

 

c. Payments can be made online, on our mobile app, through a live chat, or you can callus at 1-800-DISCOVER

 

While paying a bill can be daunting, Discover offers convenient email and text alerts you can activate to help you when the following happens:

 

a. Your statement is available

 

b. Your minimum payment is due

 

c. Your payment is posted

 

d. Your card is declined

 

e. Merchant refund is posted

 

f.  Balance transfer is posted

 

These alerts can also be cancelled at any time. Interested? You can sign up here.

 

 

Feel like you are ready to take on more credit? You can apply by requesting an increase online or you can call us at 1-800-DISCOVER.

 

When you graduate, call us to update your income and personal information such as your income, housing, e-mail, and address. Updating this information may make you eligible for credit line increases.

While many things might be changing in your life, your Discover Student card doesn't have to. You'll still keep all the same cash back rewards on your credit card. When you graduate, we encourage current student card members to call us to update their personal information such as income, housing, e-mail, and address. This may make you eligible for credit line increases.

You might need a new student credit card for a number of reasons, but simply replacing your credit card will not affect your credit score. Also, you’re never held responsible for unauthorized purchases on your Discover card account.4
Learn More
Apply for Student Cashback
Apply for Student Chrome

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  1. FICO® Credit Score Terms: Your FICO® Credit Score, key factors and other credit information are based on data from TransUnion® and may be different from other credit scores and other credit information provided by different bureaus. This information is intended for and only provided to Primary account holders who have an available score. See Discover.com/FICO about the availability of your score. Your score, key factors and other credit information are available on Discover.com and cardmembers are also provided a score on statements. Customers will see up to a year of recent scores online. Discover and other lenders may use different inputs, such as FICO® Credit Scores, other credit scores and more information in credit decisions. This benefit may change or end in the future. FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.


    If you prefer not to receive your FICO® Credit Score just call us at 1-800-DISCOVER (1-800-347-2683). Please give us two billing cycles to process your request. To learn more, visit Discover.com/FICO.

  2. Builds credit with responsible use: Discover reports your credit history to the three major credit bureaus so it can help build your credit if used responsibly. Late payments, delinquencies or other derogatory activity with your other credit card accounts and loans may adversely impact your ability to build credit.

  3. 2% Cash Back at gas and restaurants: You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters begin January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Purchases must be made with merchants in the U.S. To qualify for 2%, the purchase transaction date must be before or on the last day of the offer or promotion. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Even if a purchase appears to fit in a 2% category, the merchant may not have a merchant category code (MCC) in that category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not earn 2% if the technology does not provide sufficient transaction details or a qualifying MCC. Learn more at Discover.com/digitalwallets. See Cashback Bonus Program Terms and Conditions for more information.

  4. $0 Fraud Liability: An “unauthorized purchase” is a purchase where you have not given access to your card information to another person or a merchant for one-time or repeated charges. Please use reasonable care to protect your card and do not share it with employees, relatives, or friends. Learn more at Discover.com/fraudFAQ.