College is an exciting time for change and growth. For a lot of people, it’s the first time you start to experience financial independence. You might start thinking about things like credit scores—and how to build yours up.
You may even be a person that's not in school but is interested in the credit building benefits a student credit card offers.
If you look at credit card options for students, you might end up with more questions, like:
- Are student credit cards good for building credit?
- How are student cards different than regular credit cards?
- Do I have to be a college student to get a student card?
Let’s take a closer look at student credit cards to find these answers and more.
What Are Student Credit Cards?
A student credit card is just like a normal credit card, except that it’s designed for college students or young adults just starting out. These cards generally have lower requirements for approval. Most of the time you can get approved for a student card with little-to-no credit history.
This is good news for college students who may not have a good credit score—or any score at all. It can be hard to qualify for credit when you don’t have an established history, but you have to start somewhere. Student cards could help you jumpstart your credit-building journey.
Pros and Cons of Student Credit Cards
Opening a new credit card account is a big decision. It’s always a good idea to go over the benefits and drawbacks of a credit card before applying, including for student cards.
Pros
Builds Credit
One of the biggest benefits of a student credit card is the chance to build your FICO score. Making on-time payments each billing cycle can help you build a credit history—even if you’re starting from scratch.
High Approval Odds
Credit card issuers know most college students don’t have an extensive credit history. A lot of students don’t have a credit history at all. They make student cards more enticing by lowering the credit requirements for approval.
This makes qualifying easier if you have bad credit, low credit history, or don’t have any established credit yet.
Establish Personal Finance Habits
Like much of the college experience, your first credit card can be a learning tool. Getting a student card lets you explore how to use credit responsibly.
By using your card for everyday purchases and making on-time monthly payments, you’ll establish healthy money habits and a solid financial foundation.
Rewards Programs
Many credit cards have rewards programs, and student cards are no different. A lot of cards have student cash back rewards.
Some perks programs let you maximize your rewards based on bonus categories. For example, you might be able to get a bonus when you shop at gas stations or grocery stores.
Note that most student cards have lower rewards rates than other cards with stricter eligibility requirements. However, you can still use your student rewards to earn travel rewards, cash back, or statement credits on your account. Your card issuer might even offer a cashback match on your cashback card.
No interest, no deposit, no hassle.
Cons
Lower Credit Limits
It’s easy to qualify for a student card because credit card companies are taking a chance on someone who doesn’t have a lot of credit history. To protect themselves, credit card issuers use lower credit lines on student cards.
You might be able to eventually qualify for a higher credit limit if you make on-time payments. However, your card issuer may have a max limit for that type of card. A lower credit limit can make it difficult to keep your credit utilization low.
Potential Fees
Like a lot of credit cards, most student cards come with a long list of fees. Some fees might never be an issue, like late fees if you avoid late payments. Others, like foreign transaction fees, could affect your plans, such as a semester abroad.
Be sure to check for annual fees, as well. This is a fee the lender charges you to have your account open. Many issuers waive the fee for the first year but start charging it the next.
High Interest Rates
Like almost all credit cards, student cards usually have high interest rates. Many cards use variable APRs to adjust your interest rate. This means your rate could go up and down depending on the current market rate.
Possible Tip: You can avoid interest charges by paying your balance in full each month.
Are Student Cards Only for Students?
Nope! Student cards are usually marketed toward college students, but they’re just another category of credit cards.
A student card can be a good idea for anyone who doesn’t have a lengthy credit report. You might also qualify for a student card if you’re trying to rebuild your credit.
Are Student Credit Cards Good for Building Credit?
Student credit cards are an easy way to start building or rebuilding your credit. Each month, your credit card company sends a report to the major credit bureaus. The bureaus use this information to build your credit report and history.
To build credit with a student card, you simply need to use the card responsibly. The biggest factor in your FICO score is on-time payments. By making at least the minimum payment each billing cycle, you’ll help build your credit score over time.
No credit score? No problem. Borrow up to $500.
Alternatives for Students to Build Credit
Credit cards aren’t the only way for students to build a credit history. Consider other options if you don’t think a student card is right for you.
Secured Credit Cards
Secured credit cards are a type of credit-building card. Cardholders pay a security deposit as collateral for the card. Generally, your deposit is the same as your credit limit. That way, your lender can use your deposit in case you stop making your payments.
If you make on-time payments for a set period, your issuer will refund your deposit.
Credit-Building Loans
Lenders have developed loan programs to help people build their credit. The aptly named credit building loans let you take out a short-term loan for a small amount.
Instead of getting your funds right away, most credit-building loans keep the money in a savings account. You get the money once the loan is paid in full.
Others, such as installment loans from Possible, allow you to borrow up to $500 and pay the amount back over installments, reporting each on time payment and helping you build your credit history.
Find a Co-Signer
Do you need a specific type of loan but aren’t sure you’ll qualify? You might need to find a co-signer. A co-signer is a person who agrees to take on your debt if you can’t pay. Many college students ask their parents to co-sign student loans or car loans.
Getting a co-signer can help you qualify for a loan that requires a higher credit limit. However, you have to be careful to make your payments on time.
Just like a co-signed loan can help you build credit, it can hurt your co-signer’s credit if you don’t pay on time.
Bottom Line: Are Student Credit Cards a Good Choice?
A student card can be one of the most useful financial tools for people without a long credit history. That doesn’t mean it’s the only option, however.
When deciding how to build credit, compare different options, including credit-building loans or other types of credit cards. That way, you’ll find the right solution for your financial needs.
