How do you get a student credit card for the first time?
The Credit Card Act of 2009 stipulated that any student between 18 and 21 years old may qualify for a credit card if one of these two conditions are met:
- A parent, guardian, spouse, or another adult is willing to co-sign
- You submit proof of income and financial history proving a full-time income (or even a part-time income that’s sufficient enough to pay the balance each month).
The type of credit card you can get will depend on your credit profile. If you’re like most people starting out, you might not have much of a credit history. In this case, you’ll probably need a parent to co-sign before you are considered for a credit card.
For parents who would rather not co-sign for their student’s credit card application, there is the alternative of adding an adult child as an authorized user to an existing card account. This can help parents give specific financial advice to their child (and keep a little more control over their use of the account), while still building the student’s credit history.
You might also consider a secured credit card with your bank, which is a great way to establish a healthy credit rapport.
Most major banks and credit card providers offer credit cards for college students. If you’re a parent looking for a credit card for your college student, make sure you pay attention to the benefits and rewards. The best credit cards for college students include one or all of the following benefits:
- Forgiveness for the first late payment (we all make mistakes).
- Cash-back bonuses for maintaining a certain GPA (more incentive to hit the books).
- Rewards for common college student expenses, like food, gas, and school supplies.
How can college students establish a credit history quickly?
Building credit from scratch takes some time, but by using a student credit card responsibly, you can establish good credit faster than you might expect. To start, here are a few key rules to keep in mind:
- Always pay on time: This is the single biggest factor in your credit score.
- Automate payments: This will ensure you never miss a payment or have to pay a late fee.
- Always pay off the entire balance: Don’t spend more than you can afford to pay off each month.
- Increase your credit limit: Your credit utilization rate, or how much of your available credit limit you’ve used up, is the second biggest factor in your credit score. All else being equal, a higher credit limit will improve your utilization ratio if you don’t increase your balance.
- Keep your oldest credit card active: Even if you don’t use them, it’s best to keep old credit card accounts open. The longer your credit history is, the better.
To establish a good credit history, it’s critical that you use your student credit card the right way. Let’s talk about how to do that.
How to Use a Student Credit Card the Right Way
If you’re a college student and this is your first credit card, then you might be wondering how best to use it. The general rule most people will tell you is to only use a credit card in an emergency. However, the more important rule is to never use your student credit card for anything you can’t already afford. After all, you want to be able to build up your credit history, and one of the best ways you can do that is to pay off your credited purchases on time, every time (and ideally, in full).
You should also take advantage of the rewards programs and the signup bonuses (if there are any). If you’re buying groceries and your credit card offers a bonus on supermarket purchases, consider using it over the debit card or cash. Same for student credit cards offering rewards at gas stations. These are what we would call “everyday purchases” as they are more about necessity than things you can do without. Since you would have to pay for these things anyway, it’s a good way to build up your credit score by paying off the balance each month.
If you want to learn how to truly use credit responsibly, it’s best to start out slow and easy. You don’t need to rush into using credit exclusively, and would probably be better off making a few small transactions each month until you feel comfortable. Here are a few more tips that might make the transition smoother:
Start small with one card and a low limit
Since the most common credit card mistake that plagues students is overspending, it might be wise to begin the process with only one card that comes with a relatively low credit limit. For example, a student credit card with a $300 or $500 credit limit offers enough credit to let you get the hang of it without offering you so much credit that you risk going far into debt.
Make small everyday purchases, not extra purchases to get rewards
A common rookie mistake for students with a credit card is to deviate from their normal spending habits. Contrary to popular belief, making such outrageous purchases will not “jumpstart” your credit score. In fact, it could land you into some serious debt if you aren’t prepared to pay it all back. Instead, you should opt for a card that rewards your everyday spending and build your credit history naturally.
Understand your spending by analyzing the statement
After using your new student card for your first month, you can use the information you gain to understand your spending better. Unlike when you use cash, using credit creates a paper trail of every transaction you make. This paper trail, and the online budgeting tools the best student credit cards usually offer, make it easier to analyze your real spending and look for ways to improve it.
Pay off your balance each month
With most credit cards, you’ll be required to pay off a minimum amount of your outstanding balance. We recommend getting into the habit of paying off your balance in its entirety, every month. By doing this, you avoid getting hit with any high interest rates. It also looks good on paper as far as your credit score is concerned.
How Students Get Into Credit Card Trouble
The average college student carries more than $2,500 in credit card debt, according to Experian. Sometimes, students make the mistake of getting in over their heads with high interest rates on outstanding balances. To help you avoid these and other common mistakes, we’ve put together some examples to learn from:
Mistake #1: Overspending
It is easy to forget you are going into debt when you first start using credit. You simply swipe the card and go on your merry way. Unfortunately, the small purchases you don’t remember making will add up over the weeks and months. If you don’t keep track of your purchases in real-time, you may spend far more than you planned. When this happens, you can easily get whacked with an over-the-limit fee or spiral into credit card debt that becomes unmanageable.
Mistake #2: Spending just to earn more rewards
Many credit cards let you earn rewards points that can be redeemed for merchandise, cash back, or travel. It may be tempting to maximize this feature, but you should only do so with caution. The fact is, spending to earn rewards is never beneficial because your unnecessary spending often costs more than the rewards you get back.
Mistake #3: Making only minimum payments
When you carry a credit card balance into the next month, your credit card issuer will ask you to make a minimum payment. This minimum payment is usually only a small fraction of the amount you owe, which can be tempting if you are tight on cash. However, it is important to remember that the balance you carry over will accrue interest and ultimately cost you more money over time.
Mistake #4: Not understanding how to budget
College presents a brand new world full of opportunities and responsibilities. For most students, those responsibilities include managing their own finances. However, it can be tough knowing where to start when it comes to formulating your own budget. That’s why we put together this handy student budget calculator for anyone who needs help managing their expenses.
Student Budget Calculator
Best Cards for College Students for 2019
- Discover it® Student Cash Back: Best rewards potential
- Discover it® Student chrome: Best for dining out and gas
- Capital One® Secured Mastercard®: Best for poor or no credit
- Journey® Student Rewards from Capital One®: Best for developing responsible credit habits
If you’re ready to take on more financial responsibility, start building good credit, and potentially set yourself up for a healthy financial future, then check out one of our best student credit cards. Just remember, as the famous saying goes, “With great power comes great responsibility.”
More Great Options for Student Cards
There are so many credit cards for college students to choose from. Not only that, each card also offers its own set of perks and caveats. How are you supposed to know which student credit card is right for you? That’s where our student credit cards directory can really help:
Rewards Tier Level
No APR for 6+ Months
Good Ongoing Rewards
No Foreign Transaction Fee