As exciting as college can be, it’s also a bit overwhelming – and we’re not just talking about the papers and exams that are cramming your schedule. We’re talking about the financial aspect, too. Even if you have financial aid, there are probably some expenses it doesn’t cover. Sure, you could ask your parents for help, but you want to be independent. And anyway, you need to prepare for life after college. How can you do that while paying for your own expenses? Student credit cards.
What Is a Student Credit Card?
Student credit cards are a lot like regular credit cards in the sense that you use them to pay for your purchase and then repay the money. The differences typically come with the approval process and the perks that come with them.
Let’s talk about the perks first. Most regular cards offer perks like airline points or cash back at the gas station. These are great rewards for many people. However, they don’t always apply to students.
You know what does apply? Free annual membership to Amazon Prime, meal perks, and streaming subscriptions.
Those are the types of rewards you can gain from using a student credit card. Even better, some offer things like a statement credit if you keep your GPA up to a certain level. Talk about an incentive to hit the books!
Another difference is in applying for the card. Issuers that offer student credit cards are well aware that you haven’t yet had time to build a credit score. Some students haven’t used their credit a single time. Therefore, they make contingencies for that. They typically go more by income than anything else. And most allow you to get your parents to co-sign or even for you to claim your spouse’s income if you happen to be married. In short, they can be a bit easier to get for many students than regular credit cards.
Reasons to Get a Credit Card As a Student
There are plenty of good reasons to get a student credit card. Before we dive into those, though, it’s important to understand something. Credit cards are handy and can help you out. But if you use them irresponsibly, it can mess you up for years to come.
So as we talk about these benefits, remember that we are talking about responsible credit card usage. Don’t let your credit card be an excuse to go wild and fill your dorm full of stuff you can’t afford.
Now that we’ve had that talk, let’s get to the fun stuff.
You’re in college to learn, right? Why not extend your curriculum to learn how to manage credit the right way? By using a student credit card, you learn how credit works as a whole, how to track your spending, how to pay your bills each month, and more. And these lessons can follow you until the day you breathe your last breath.
Understand that you’re new to it, so you’re going to make some mistakes. That’s okay – we all do. Mistakes aren’t something to beat yourself up over, though. They’re something to learn from, so you can do better next time. So, as long as you’re mindful while you use it, you can learn a lot from using a student credit card.
It’s not uncommon for college students to live on Ramen noodles and to barely skate by with finances. In fact, many people actually enjoy that part – at least to some degree. It’s part of the college experience. However, not a single one of those students will deny that they’d like to order a pizza during all-night study sessions or not have to wait for a monthly stipend to buy deodorant.
Student credit cards can help you get by in between paychecks or monthly allotments without having to call and explain to your parents why you blew all of last month’s. This is, however, one of those don’t go crazy areas. An occasional burger or pizza and purchasing necessities are good. Just try to keep the spending in check.
You won’t always have a dorm room to stay in or student aid to help cover your needs. One day you’ll graduate and, unless you want to move back in with your parents, you’ll need to rent a place. Unfortunately, this can be hard for most recent graduates as you’ve spent the last two to four years focusing on school.
A student credit card can make a big difference at this time. If you’ve been using and responsibly managing your card while you’re in college, you have two to four years of positive credit history. This can help you get approved for everything from an apartment to a new car.
It can even help you land a good job and get lower insurance rates. Bottom line: you can pave a brighter financial future simply by being responsible with your credit before you ever actually need to use it. Who doesn’t need a jumpstart in life?
We talked a little about the perks above, but it’s worth mentioning again. Some student credit cards come with some pretty amazing rewards. Who can’t use a free year of Amazon Prime? Granted, these benefits vary between card issuers, but most offer something that a college student can put to work.
For example, there are some cards that offer forgiveness for one late payment in a given period. Since you’re just starting to learn how to manage your credit, this benefit can be really awesome. Some companies even have scholarship programs for their participants. And most offer 0% interest in your first year of use.
Pros and Cons of Student Credit Cards
Okay, so let’s review the pros and cons.
Pros
- Ability to build your credit history and score before you’re responsible for all your own bills
- Incredible learning experience with real-world applications
- Freedom to take care of needs and wants between checks or allotments
- Great rewards programs that can help you through your college career
- Ability to take care of emergencies, like flat tires or dental appointments for toothaches
- Opportunity to build healthy financial habits early
- Usually easier to get than a regular credit card
Cons
- Leads to temptation to spend when you shouldn’t or to spend more than you should
- Could be stuck with a high-interest rate after introductory offer
- Irresponsible use can impact your future for years or even decades to come
- Usually a lower credit limit than regular cards
- Might need a cosigner or have to choose a secured card
How to Get a Credit Card As a Student
Getting your student credit card doesn’t have to be complicated. You just need to follow these steps:
1. Think about what you need the card for and what kind of perks would be nice for you. Before you start looking for one, it’s better to have an idea of what to look for.
2. Start your engines – I mean, your research. Compare the different cards available to find which one offers what you’re looking for.
3. When you’ve found a few that you like, take a look at their requirements. Determine if you’ll need a cosigner, what types of income they require, what documentation they accept to prove you’re a student, and anything else you can find.
4. Gather all of the documentation you need. The process can move a little quicker if you’ve got everything in hand before applying. And if you need a cosigner, go ahead and talk to your parents at this point.
5. Lastly, it’s time to apply.
5 Best Credit Cards for Students
We’re going to help you get started with your research by showing you five pretty awesome options below.
This card is a pretty good one, as it’s really easy to apply. You don’t even need a credit score to do it. And yet, you can earn 5% cash back on pretty much anything you buy using PayPal.
So, when you go on an Amazon shopping spree or splurge on pizza night – or do the responsible thing and buy school supplies – you’re earning 5% of that back. If you don’t use PayPal, you still earn 1%. Even better, they match everything you earn that first year.
You also get 0% interest for the first six months. Unfortunately, that can jump up to 22.74% after that period, so you’ll need to be prepared for that.
If you like the idea of cashback and monetary rewards, this is a pretty good card. You can earn 3% cash back on streaming, dining, entertainment, groceries, and more. And you earn a $100 cash bonus if you spend $100 on your card within three months of getting it.
There is no annual fee, which is great. At this time, though, there is not a 0% interest rate introductory offer. Instead, you’ll pay 15.24% to 25.24% from the beginning. They do run introductory offers sometimes, though, so look into it before you avoid this card.
The Chase Freedom Credit Card is a little different than the other options on this list so far. It offers a lower cashback amount at only 1% on all purchases. This might seem undesirable, but it can actually be nice.
It means you don’t have to keep up with how much you’re earning – it’s the same amount all of the time. And, unlike most cards, you don’t need to hit a minimum balance to redeem those rewards. You can redeem them at any time – no matter how few or how many you have available.
There are some other benefits, too. For instance, you get a credit limit increase after you make five timely payments. There’s also no annual fee and you get $50 after you make a purchase using your card in the first three months.
If you’re going to college a long way away from home, this might be the best card for you. The Bank of America Travel Rewards Credit Card for Students allows you to earn 1.5 travel points on every single dollar you spend.
And if you spend at least $1,000 in the first 90 days, you get a bonus of 25,000 points. These can come in really handy when it’s time to fly home for the holidays or during summer break. And the good thing is you don’t have to worry about blackout dates.
Additionally, there is no annual fee. You get 0% interest for the first 15 billing cycles, but that can increase to 24.74% once that intro period is over.
For those who love to stream, the Journey Student Credit Card from Capital One gives a $5 streaming subscription credit each month as long as you make timely payments. Subscriptions like Amazon Music Unlimited, SiriusXM Streaming and Satellite, Spotify, Disney+, and Prime Video are all eligible.
Additionally, you earn 1% cashback on all purchases. And you can increase that to 1.25% if you make your payments on time. There’s no annual fee, but the interest rate is 26.99%. That can quickly add up. The best way to earn all of your rewards and prevent yourself from having to pay such high interest is to pay your balance before the end of the billing period.
How to Responsibly Manage Your Card
One of the most important tools you’ll learn to use as an adult is a budget. It is a clear plan about what you need to pay and where to send your money each time you get paid. That helps you make smarter buying decisions, as you know how much money you have for extras.
As a college student, you might not yet know how to budget or be very comfortable with it, but there is a simple solution for it. Head to the Goalry Mall and sign up for your member key. There you’ll find a budgeting tool that can help you stay on track.
You’ll also find other financial tools and a plethora of educational resources that can teach you everything you need to know about finances. By the time you graduate from college, you can be a master at managing your money.
Conclusion
Student credit cards can be a very helpful tool – as long as you manage them responsibly and find one that suits your needs. Take the time to look through the options listed here as well as any others you come across. Compare them before making your final decision. Then, put a budget to work to ensure that your card helps you instead of negatively impacting your future.
Julia Peoples is a long-time business manager focused on providing decision making assistance to the public. She works with people at key points of their lives who are making important retirement and financial decisions. She has had many articles published that educate the public on sound financial decision making.
Julia writes for those who are working towards financial freedom or a better understanding of how finances work. She has shared her financial insights with individuals on a one on one basis for years.