In addition to tuition, college entails a variety of other expenses, including textbooks, rent, groceries, gas, etc. In fact, full-time students at two-year public colleges, four-year public colleges, and four-year private colleges spend thousands of dollars on top of basic tuition and fees.
Let’s say you’re a full-time undergraduate student at a state public university. According to a 2023 College Entrance Examination Board report, you’ll spend an average of $12,770 on room and board for the 2023-2024 academic year, plus another $1,250 on books and supplies.
Additionally, the report states that you will spend an average of $1,290 on transportation and $2,270 on other expenses. That adds up to $17,580. If you’re attending a private university, these costs will be slightly higher. Your individual expenses may vary from these averages, so it may be helpful to calculate your student budget to get a more accurate figure.
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Of course, you can pay for these expenses with cash or a debit card, but with a student credit card, you can earn rewards as you spend. Student credit cards are regular credit cards, but they’re designed for students who are new to credit cards. They often have no annual fees and offer student-specific cardholder perks and rewards programs. Importantly, they also have approval criteria that are tailored to the typically low-income and first-time credit card situation of students.
If used responsibly, student credit cards can help you build your credit history. You need a strong credit history to achieve your future financial goals, like buying a car, getting your first apartment, or buying a home. So if you know you’ll need to spend thousands of dollars while in college anyway, you might as well take advantage of the rewards and build your credit.
For example, recent college grad Daniel Kelton knew he needed a new car but had no credit history, so he used a student credit card to build credit. After leaving the military and returning to school, he got a Capital One Quicksilver Student Cash Rewards Credit Card and used it for a year to build credit before applying for a car loan.
“Over the course of two years, my credit score has risen to the excellent credit score range,” Kelton says. “The high credit limit on the card was a big benefit because it allowed me to keep my credit utilization ratio low. Now that I have a credit history, I’m looking to move on to a card with more rewards.”
If a student credit card seems like the best choice for you, there are some perks and benefits you’ll want to check out before submitting your application.
- Remuneration and its structure
- Credit-building opportunities
- Special offers for students
- Welcome Bonus
You should also learn how to choose a student credit card so you can make a confident decision. We’ve reviewed the best student credit cards, and the top cards offer the following benefits:
Automatic credit limit check
When you get started on a student credit card, you often start with limited or no credit, so if you’re approved, your credit limit will be low. However, many student credit cards include an automated account review.
This means that the card issuer will periodically check your account to see if you’re making your payments on time and using your credit card responsibly. If you are, the issuer can choose to increase your credit limit. That’s exactly what happened with Kelton’s student credit card.
“The value of this card to me was that it didn’t have a huge limit, even though I had no credit score,” he says. “It was unsecured and I was given a generous credit limit ($3,000). It was a full-fledged credit card that you could get even if your credit wasn’t that great. It’s not that I had bad credit, I just didn’t have it. After a year or so of my account being in good standing, the issuer increased the limit to over $5,000.”
Having more available credit can help lower your utilization ratio and improve your credit score. The increased credit limit helped Kelton take his credit score to the next level and achieve his goal of obtaining a new car loan.
Low fees
Student credit card issuers understand that you’re just starting to learn the ins and outs of credit, so they tend to offer discounted fees. It’s not uncommon for common credit card fees, like late fees and annual fees, to be low or even waived on student credit cards. A typical discount, for example, is a $0 fee on your first late payment, followed by the full late fee the next time you’re late.
Plus, there are plenty of student cards that don’t charge foreign transaction fees, so feel free to bring them along for your study abroad or spring break adventures.
Rewards Program for College Students
If you’re a student, your spending may be different than experienced credit card buyers, which is why student cards often have rewards programs geared towards college students. Most student cards offer a percentage of points on common purchases like streaming services, groceries, gas, and restaurants. These points usually come in the form of cash back, because there’s no college student who doesn’t need some extra cash.
As a testament to the perks that student credit cards can offer, Kelton also shared how he strategically used his student card to earn significant cash back while building credit.
“I also earned over $400 in cash back,” he explains. “I started paying for all my groceries and gas on the card. I paid it off every month so I wasn’t racking up interest payments.”
By paying off the balance each month and avoiding interest payments, the reward went directly into his pocket.
Welcome Bonus
Student card welcome bonuses, also known as sign-up bonuses, are usually given in the form of cash, points, or statement credits once you meet certain spending requirements. Earning a welcome bonus is an easy way to multiply your rewards right from the start, to spend on school supplies, dorm essentials, or simply to boost your savings.
Whether you shop online or in a store, there’s always the chance that a fraudster will get hold of your card information and inflate your charges. If your credit card information is compromised and used to make fraudulent purchases, federal law limits liability to $50. Nearly all credit cards have zero liability protection as long as you report fraud within 60 days. The same is not true for debit cards or cash.
The best thing you can do as a student credit card holder is to stay on top of your credit profile. Healthy credit habits developed today will serve you well in the future, so anything that furthers this goal is a huge asset.
For example, Capital One’s student card includes access to CreditWise, a service that monitors your credit profile and protects you from identity fraud, from access to credit report change alerts from Experian and TransUnion to dark web scanning and tracking of your Social Security number.
Conclusion
Student credit cards come with many perks and benefits that can make campus life easier. But if you don’t use your student card responsibly, those perks can easily be negated. Interest payments can quickly wipe out any perks you’ve earned, so you should prioritize developing healthy credit habits over earning as many perks as possible.
Overall, a student credit card can support you in the process of building credit and help you achieve your other financial goals. Once you’ve mastered these concepts with a student credit card, you can apply your good credit management skills to other areas of your financial life.
