What Is A Student Credit Card?

Whether you’re an undergraduate, graduate or non-traditional student, using a credit card that meets your needs is a great way to handle your money and build credit while juggling a student workload. Establishing a positive credit history early can also have a significant impact on future financial milestones — like applying for your first apartment, purchasing your first car or getting a mortgage.

What is a student credit card, and how do they work?

A student credit card is a revolving line of credit geared toward students with no credit history. Like any other credit card, a student card allows you to make purchases and then repay the balance — plus any accrued interest and fees — at a later date. Doing this responsibly can help students begin building a credit history for their long-term credit journey.

How student credit cards work

When a student applies for a credit card, they undergo a basic application process that usually requires proof of enrollment in a school, income information (which can include part-time jobs or allowances) and personal identification. If approved, the student receives a credit card that allows them to make purchases up to their credit limit.

Student credit cards vs. other credit cards

What sets a student credit card apart, however, are these main features:

• Ease of approval. Typically, students applying for their first credit card often have limited or no credit history. Student card issuers know this and hold student credit card applications to different approval criteria, which are typically less stringent than those for traditional non-student cards. For example, some student credit cards — including the Discover it® Student Cash Back — don’t require a credit score at all to apply, and most have more lenient income qualification requirements.
• Student-based eligibility requirements. As long as you’re enrolled in an institution of higher education, you can enjoy the less strict qualification criteria of a student credit card. You don’t have to be a full-time student to apply for a student credit card, but you will need to meet certain eligibility requirements depending on the issuer.
• Lower credit limits. These cards typically have lower credit limits to help students manage their spending responsibly.
• Student-centric purchase rewards. Many student credit cards also offer rewards and benefits tailored to the needs and preferences of young adults, such as cash back on dining. While some student cards are bare bones when it comes to rewards, there are a few that offer rewards on student-centric purchases, like streaming subscriptions or Amazon spending.

Reasons to get a student credit card

Getting a student credit card can be beneficial for a variety of reasons. Here are just a few:

• You can build a positive credit history
  

  The main reason to get a credit card in college is to begin building credit, and student credit cards help by reporting your account activity to the three credit bureaus — Experian, Equifax and TransUnion. The length of your credit history — or how long you’ve had credit accounts — makes up 15 percent of your FICO score, so the longer you have a credit card open and in good standing, the better.

  There are multiple benefits to having a good credit score, such as:

  • Rental advantages. Landlords may look more favorably on you if you have a high credit score, because they’ll see you as more likely to pay your rent regularly.
  • Career opportunities. Potential employers may turn to your credit score to vet you for employment, so the higher, the better.
  • Premium rewards. A higher score can also help you qualify for credit cards with better features and higher rewards.
  • Lower loan costs. Good credit allows you to get lower interest rates and better terms on loans you might take out in the future. For instance, if you apply for a mortgage to buy a house, your good credit score could help you garner a lower interest rate.

• You can take advantage of rewards and other perks
  

  A variety of student cards earn cash back on popular student spending categories like dining, entertainment and gas. Some cards also offer other perks and benefits beyond rewards, like free credit score access, no foreign transaction fees (which is great if you plan to study abroad) and 0 percent intro APR offers on purchases or balance transfers for a limited time.

  For instance, the Capital One Savor Student Cash Rewards Credit Card offers:

  • 8 percent cash back on purchases through Capital One Entertainment
  • 5 percent cash back rewards on hotels, vacation rentals and rental cars booked through Capital One Travel
  • 3 percent cash back on dining, entertainment, popular streaming services and at grocery stores (excluding superstores like Walmart and Target)
  • 1 percent on other purchases

  This card also offers extended warranty protection on eligible items purchased with the card, as well as travel accident insurance when you use the card to purchase your fare.

• Your card will likely have low or no fees
  

  On top of rewards and eligibility requirements, many student credit cards don’t charge annual fees. Study-abroad hopefuls may also enjoy waived foreign transaction fees, but you should always check the card’s terms and conditions.

• You’ll have an additional way to cover emergency expenses
  

  As you’re starting your journey into adulthood, unexpected events will arise.

  Let’s say your car battery dies. You need to replace it so you can get to work and school, but there’s not enough in savings to cover a replacement. By paying for the repair with your student credit card, you can solve the problem without needing to apply for a new loan or line of credit.

  However, charging emergency expenses to a credit card and paying off the balance over time can be expensive thanks to high credit card interest rates — so this should be a last resort. If you charge an emergency expense to your student credit card, try to pay off the balance as soon as possible by making more than the minimum payment due every month.

• You can learn positive financial habits
  

  Getting a credit card helps young people learn responsible financial habits, including tracking their spending and paying their bills on time. But while you’re still learning, you might slip up. Since student credit cards tend to come with low credit limits and fewer fees, these lessons can be learned in a “sheltered” environment without the risks that come with higher credit limits and penalties.

  The Discover it® Student Cash Back card, for example, waives your first late payment fee, but late fees go up to $41 thereafter.

  Keep in mind: Missing credit card payments will have a negative impact on your credit score, no matter what. If you can’t pay the card in full, then be sure to pay the minimum required on or before the payment due date to avoid late fees or major hits to your credit score.

• You’ll enjoy a convenient and safer way to spend
  

  Credit cards are convenient, and that’s especially true in today’s world. Unlike cash, a credit card can help you shop online with ease, and you’ll typically need a card to rent a hotel room or a car. Plus, credit cards also offer legally required fraud liability protections that debit cards don’t have.

Risks of a student credit card

Some credit card beginners make the mistake of viewing a credit card as access to “free money,” but in reality, credit cards are among the most expensive ways to borrow. Before you get a student card, make sure you understand the following risks involved:

• You might get a high interest rate. Card issuers usually view students as high-risk borrowers, which often results in higher interest rates on student credit cards. Credit card APRs average over 20 percent right now. So, if you carry over a balance month-to-month, interest charges will add up fairly quickly.
• You’ll start with a low credit limit. On top of high interest rates, issuers usually grant lower credit limits with student credit cards. Once you’re able to demonstrate your creditworthiness with a consistent, on-time payment history and responsible usage, your issuer may automatically increase your credit limit. Or, you can contact your issuer and request a higher credit limit. But until then, you’ll typically be left with a low credit limit.
• You’ll have to deal with potentially outgrowing your card. Student credit cards are designed to benefit students. Once you graduate, you might be left with a card you don’t use. However, if you outgrow your student credit card, many issuers provide a path so you can upgrade your card once you’re no longer a student.

Should you get a student credit card?

Getting a student credit card is usually a smart financial move if you can’t get approved for a regular card, but you’ll still have to weigh the pros and cons for yourself. You’re likely ready for a student card if:

• You understand how credit cards work
• You want to start building your credit history
• You can control your spending and stick to a modest budget
• You’re prepared to pay off your bills on time and in full every month

Applying for a student credit card

Once you’ve evaluated your financial situation and decided a student card is the right choice for you, it’s time to apply. Here are five steps to applying for a student credit card:

1. Know your credit score. Your credit score is the key to knowing what cards you could be approved for. If you don’t have a credit score yet, there are still cards you can apply for.
2. Go to the card’s issuer site and find the application. Once you’ve found the card that works best for you, locate the application for your card of choice.
3. Apply for the card. Gather and input all necessary application information, such as your name, address and annual income.
4. Look out for an application decision. An application decision could be instant, or it could take a few days. If you are denied, an issuer is legally required to send a letter detailing the reason.
5. Make a payment plan. If approved, note the card’s payment due date to ensure you always pay on time and in full to avoid added interest charges. You will then receive the physical card in the mail.

Age and income requirements for a student credit card

By law, the minimum age to be a primary cardholder is 18, but there are additional proof-of-income requirements for applicants under the age of 21.

If you’re under the age of 21, credit card issuers will typically require you to show proof of income, but for students, that proof requirement is usually more relaxed. For example, the minimum income requirements are usually lower, and you can often list several sources of income apart from a full-time job, such as:

• Part-time
• Seasonal income
• Summer and campus jobs
• Regular allowance or stipend from a parent or other relative
• Some scholarships and grants

Alternatives to getting a student card

What if you don’t qualify for a student card but are still hoping to build or rebuild your credit? Consider applying for a secured card or becoming an authorized user on a trusted cardholder’s account, instead. Here’s a breakdown of each option:

The bottom line

A student credit card can be a great way to start building your credit early so you’ll have an easier time accomplishing life’s biggest milestones.

Paying your credit card bill on time and in full should always be your first priority. Do your research and pick a card that best fits your unique financial needs.