Student Credit Cards
Applying for a student credit card while in college can help young adults establish a good credit history, which will, if managed responsibly, assist you after graduation when looking to finance a car, lease an apartment or even qualify for a mortgage.
Over the past decade, student credit cards have developed some creative tools to help students manage credit card expenses, payments, and debt, as well as reward students for effective financial management.
For example, some student card issuers offer cashback rewards programs for card purchases at Amazon, grocery stores, gas stations and restaurants, or even give students an annual statement credit for good academic standing. Some waive a late fee the first time you miss a payment, or allow you to deactivate your card from your phone if it’s lost or stolen. Many card issuers also provide access to your credit score, which you check regularly to see if how your borrowing and repayment activity is affecting your credit.
Know that in order to be approved for a new student card, you must be able to prove a steady source of income that will be included on the application. Also know that if this is your first card, the initial credit line may be small. However, with responsible use (such as paying on time and keeping the balance low), an issuer may conduct periodic assessments and increase the credit line incrementally over time.
When researching credit cards to apply for, it’s important to take a close look at the APR, any fees (such as annual fees or late fees), as well as how a particular rewards program works. It’s also important to know that many cards advertise a range of APRs (for example, 14.99% to 24.99%), but you will not know what APR you will be granted until after you are approved. The general rule for APR ranges is that the better your credit score, the lower the APR you’ll get, but that’s not always the case. You can avoid paying any interest entirely if you pay the full balance off every month.
The sooner you get started responsibly managing credit products, the better. Once you have built up a respectable credit score, you will most likely be able to qualify for other credit products at the best rates and without a cosigner.
The most important factor affecting your credit score is payment history, so always pay on time. The second most important factor is credit utilization, which the amount of debt you’re carrying relative to your credit line. To achieve a higher credit score, don’t max out your card’s credit limit. Keep your balances low – less than 30% of your credit line – and even better, pay off the entire balance every month.
Building and maintaining a respectable credit score is something to be proud of. Responsibly managing a credit card or two can pave the way to a great credit profile. Start slow and pick a card you think you will be a good fit for your lifestyle. Here are some of the top picks for student credit cards from CompareCards. Set up payment reminders, don’t charge too much and you’ll soon be on the right path to building a credit profile! (Disclosure: CompareCards is an affiliate of LendingTree, which also is SimpleTuition’s parent company.)