Whether you are an undergraduate, alumni, or non-traditional student, using a credit card that meets your needs is a great way to handle your money and build credit while juggling your student’s workload. Establishing a positive credit history early can have a significant impact on future financial milestones, such as applying for your first apartment, purchasing your first car, or getting a mortgage.
What is a student credit card?
Student credit cards help students begin building their credit history for their long-term credit journeys. Like other credit cards, student cards are revolving lines that can be used for purchases to repay your balance, allowing you to repay valid interest and fees at a later date.
How a student’s credit card works
When students apply for a credit card, they usually undergo a basic application process that requires proof of school registration, income information (which can include part-time work and allowances), and personal identification. If approved, students will receive a credit card and allow them to purchase up to credit limits.
How does a student’s credit card differ from other credit cards?
However, these are the main features that highlight a student’s credit card.
- Ease of approval. Typically, students applying for their first credit card often have a limited or no credit history at all. Student card issuers know this and keep student credit card applications to various approval criteria. This is usually less stringent than traditional non-student cards.
- Student-based eligibility requirements. As long as you are enrolled in a higher education institution, you can enjoy the non-strict eligibility criteria for student credit cards. You do not need to be a full-time student to apply for a student credit card, but you must meet certain eligibility requirements depending on the issuer.
- Lower credit limits. These cards usually have low credit limits to help students manage their spending responsibly. Students can use these cards to make purchases and build credit history. However, it is important to make timely payments and maintain low credit utilization to avoid debt accumulation.
- Student-centered purchase rewards. Many student credit cards also offer rewards and benefits tailored to the needs and preferences of young adults, including meal cashback. Some student cards are bare bones when it comes to rewards, but there are several that offer rewards for student-centered purchases, such as streaming subscriptions and Amazon spending.
Why get a student credit card?
While some newbies with credit cards make the mistake of viewing credit cards as access to “free money,” in reality, credit cards are one of the most expensive ways to borrow. If you are considering getting a student credit card, it is important to get in for the right reasons.
Student credit card risk
There are also drawbacks to keep in mind with student credit cards.
- High interest rates. Card issuers usually consider students as high-risk borrowers, and often have higher interest rates on students’ credit cards. Credit card APRs currently average over 20%, with student cards often at the high end. Therefore, if you carry over your balance each month, the interest rate will be added fairly quickly.
- Lower credit limits. In addition to high interest rates, issuers usually grant low credit limits on student credit cards. Once you are able to demonstrate your credit abilities with consistent, on-time payment history and responsible use, issuers can automatically increase your credit limits. Alternatively, you can contact the issuer and request a higher credit limit. However, up until then, credit limits will usually remain low.
- The possibility of growth. Student credit cards are designed to benefit students. Once you graduate, there may be some cards you won’t use. However, if you exceed your student’s credit card, many issuers offer a pass, so you can upgrade your card once you are no longer a student.
If you are not a student and still want to build or rebuild your credits, you can consider applying for a secure credit card or another card option that is best suited to your current credit score layer.
Apply for a student credit card
Once you have assessed your financial situation and determined that your student card is the right choice for you, it’s time to apply. Below are five steps to applying for a student credit card:
- Know your credit score. Your credit score is the key to knowing which cards you can approve. Even if you don’t have a credit score yet, there are still cards you can apply for.
- Go to the card issuer site and locate the application. Once you find the card that’s best for you, find the application for the card you’ve chosen.
- Apply for a card. Collect and enter all the application information you need, including your name, address, and annual income. If you’re wondering what to enter for your annual income, consider part-time jobs, scholarships, grants, and payments from regular allowances.
- Keep an eye on your application decisions. Application decisions can be instantaneous or take days. If you are denied, it is legally necessary for the publisher to send a letter detailing the reason.
- Make a payment plan. If approved, be aware of the due date on your card and make sure you always pay in full on time to avoid any additional interest charges. You will then receive your physical card by email.
Student Credit Card Age Requirements
The law requires that the minimum age for a primary cardholder is 18 years old, but applicants under the age of 21 have additional proof of income requirements.
If you are under the age of 21, the credit card issuer must provide proof of income, but you cannot use household income that can start at age 21. If you are over 18 years old and do not have the income that requires you to be approved for your credit card yourself, you should consider applying for Cosigner or becoming a certified user with your trustee account. You can also consider a secure credit card with low income requirements.
Conclusion
Student credit cards are a great way to build credit early, making it easier to achieve the biggest milestones of your life.
Paying your credit card bill on time must always be your number one priority. Do your research and choose the best card for your unique financial needs.
