What You Need To Know About Student Credit Cards

Personal Loan

Before my husband and I got married, we had a conversation about merging our finances. I wasn’t too worried about his financial habits – he’s always lived a  frugal lifestyle – but I wanted to know how compatible we were. I was more than a little surprised to find out he had no credit score.  

As it turns out, he had avoided getting a credit card all through college because he was scared of falling into debt. The way he saw it, there was no reason to use credit if he only made purchases he could afford with cash. That may sound responsible, but it took us over six months of using a prepaid card to build his score enough for a traditional card. Years later, we were able to use our stellar credit scores to help qualify for our first mortgage. 


Things worked out for us, but it would have been a lot easier if he had started using a credit card while in college. The student credit card is designed exactly for this purpose – here’s what you need to know about them. 

Why Get a Student Credit Card? 

If your parents are covering most of your expenses and you already have a debit card, why do you need a credit card? After all, isn’t a credit card just an easy way to get into debt? That may be partially true – and a misused credit card is absolutely the quickest path to financial ruin – but it can also be the best way to build credit. 

A student credit card is like a starter pack for your financial life. It’s not the shiniest, flashiest card with the best features, but it will help build your credit score. It might also be a better choice for you than a secured card or a prepaid credit card. 

Even if you don’t believe in taking out loans, a healthy credit score is necessary for navigating life. Almost every landlord will run your credit and won’t approve your application if you don’t have a good score. If you eventually try to buy a house or take out a car loan, you’ll need a solid score for that too. Even the hiring process sometimes involves divulging your credit score.

When you have a student credit card, payments are reported to one or all three of the main credit bureaus: Experian, Equifax and TransUnion. Every time you pay your bill, the card issuer notifies the credit bureau. Those transactions become a report card that adds up over time. 

It can take less than a year of on-time payments to build a successful credit score, so it’s not impossible to leave college with respectable credit. Having a good score before you graduate is a good start for a successful financial life post-college. Credit scores range from 300 to 850, with higher scores qualifying for the best rates and loan products. Once you reach a 700 score, you might decide to apply for a credit card with better features. 

How to Qualify for a Student Credit Card 

To qualify for a student credit card, you have to be a current college student. You also need to provide proof of income to the card issuer. Scholarships, grants or work-study don’t count as income, but part-time jobs do. If you’re under 21 and don’t have a job, you can ask a parent to cosign on the card. Remember, when a parent cosigns it means they’ll ultimately be responsible if you default on the card with an outstanding balance.  

To look up your credit report, go to AnnualCreditReport.com. You’ll find credit reports from all the credit bureaus, showing any current or past forms of credit. That includes student loans, auto loans, personal loans and any other debt product.

Even if you’ve never taken out a loan before, it’s wise to check your credit report every once in a while. Identity theft is common, and thieves can open new lines of credit in your name for years before you find out. The sooner you discover any problems or mistakes on your credit report, the sooner you can fix them.  

If you get denied for a student credit card, look into a secured credit card that requires a deposit to act as collateral. A secured card is another stepping stone to building good credit. Another option could be to become an authorized user on the credit card of someone you trust (such as a parent), which allows you to piggyback off their responsible spending. 

How to Use One Responsibly  

A credit card is a tool, not a toy. A credit card is not an excuse to buy a new laptop, take a weekend trip or go on a shopping spree. All the money you charge on a credit card will be your responsibility, whether you pay for it now or later.  

When you look at your credit card statement, there are three figures you’ll want to take a look at (in addition to scanning the transactions). One will be the statement balance, which is the total of your balance when the billing period ended. One number will be the minimum amount due, which is how much you need to pay to stay current. The third figure will be the current balance, which is the balance owed on the card the day you look at it. 

Ideally, you should pay the statement balance or current balance every time the credit card bill is due. If you pay the minimum or less than the statement balance, you’ll be charged interest fees on the remaining sum (unless you received an initial 0% APR rate).  

Interest on a credit card can add up quickly because of how the minimum amount is structured. The minimum amount is usually between 1-3% of the total bill. If your balance is $500, your minimum bill might be $15.  

A credit card balance is a revolving debt, which means there’s no set deadline on when you need to repay the money in its entirety. If you only make the minimum payment every month and keep using the card, you could be in debt for years and pay hundreds (at a minimum) in interest. 

It’s also recommended to keep your utilization under 30% of the total available credit as higher utilization could result in a lower credit score. For example, if your credit limit is $1,000, to stay under 30%, you don’t want to charge more than $300 before paying it down. When you utilize more than 30% of your credit, credit bureaus might start to think you’re using a credit card to fund an unsustainable lifestyle. 

A great way to use a student credit card responsibly is to put one small recurring bill on the card, like your cell phone or internet bill. Then, you can set up automatic payments to the credit card from your bank account. This way you won’t ever miss a bill or spend more than 30% of your available credit. 

What are the Downsides? 

Student credit cards are a great option for young people with no credit, but they don’t offer the same range of rewards that other cards do. You’re unlikely to earn a free trip to Miami with a student card, for example. Ideally, a student card would be used just long enough to improve your score and qualify for a better credit card. 

Student cards also carry the same inherent risk as other forms of credit, in that they can be a gateway to debt. Swiping a credit card is easy and mindless, especially if you don’t check the balance until the statement comes. Plenty of young people have learned this lesson the hard way, setting themselves up to struggle in early adulthood – or saddling their parents with an undue financial burden. 

Student credit cards also can have higher interest rates, which means any revolving debt will accumulate more debt at a higher rate. That’s why it’s important to transition to a traditional card as soon as possible. 

How to Compare Student Credit Cards 

Not every student credit card is the same. Each has their own set of fees, benefits and drawbacks. Here are the best ways to compare student cards before finding the best one for you. 


The APR is the card’s annual interest rate. Credit cards only charge interest if you don’t pay the balance in full, which means you don’t have to worry about the APR unless you won’t be able to pay the full bill every month. 

Some cards offer 0% APR for a certain amount of time, usually around six months. During that period, you can only pay the minimum amount and not be charged interest. Be familiar with the details of your introductory rate, for example, if you pay a bill late, the 0% offer may be revoked and you’ll be charged back interest for previous billing cycles. 

Annual Fee 

Some card issuers charge an annual fee, between $25 and $99. Avoid getting a card with an annual fee if possible.  


Credit cards often have rewards, such as cash-back on certain categories or points you can redeem for merchandise, travel and more. Pick the rewards system that works best for you. If you travel a lot, cash-back on travel purchases makes more sense than 5% cash-back at grocery stores.  

Be sure to understand the cash-back or rewards policy thoroughly. Some require you to manually sign up or activate the cash-back beforehand in order to get credit for your purchases. 

Sign-up bonus 

Some credit cards provide sign-up bonuses, like a $100 bonus when you spend $500 in three months. This is a one-time benefit and only available for new customers. Be cautious of spending the required amount unless you know you can pay it off. Rewards and bonuses are canceled out when you carry a balance and pay interest.

Credit Limit 

Most student credit cards have low credit limits, often around $500. A credit limit is how much money you’re allowed to charge on the card. The higher the limit, the more money you have access to. 

Other Perks 

Some student credit cards come with free perks, such as free credit score notifications or identity theft monitoring. Each of these benefits varies based on the card.