How to responsibly maximize your card benefits
Some student credit cards will reward you for using the card responsibly, either by offering an annual bonus or by increasing the rate at which it earns rewards. To get these benefits, be sure you’re paying your monthly bill on time, which can also help you avoid interest charges that would otherwise cut into your profit.
Student credit cards often offer a way for you to keep track of your credit score. It’s a good way to see how paying on time and maintaining a low credit utilization ratio -- the ratio of your total debt compared to your total available credit -- can lead to healthy credit scores. It’s also a good idea to keep your credit card account open as long as possible. The age of your credit accounts affects your credit and closing an old credit account can even ding your credit score in the long run.
Why it’s important to build credit
Your credit score determines whether you qualify for a loan and what kind of terms you get, whether it be an auto loan, a mortgage on a house or even a credit card. A good credit score is how you show lenders you’re not a risk.
Having a higher credit score will lead to you getting more favorable rates and terms when it comes time to apply for credit products. The better the credit score, the lower the interest rate will be on credit products, and the less you’ll have to pay over time. You’ll also be more likely to qualify for credit products at all. If you want to lead a good financial life, it starts with building a solid credit history through on-time payments.
How to build credit with your student credit card
Getting your first credit card is a big responsibility. You’ll want to establish healthy credit habits once you open your card to build your credit and avoid credit card debt. When using your card, be sure to:
- Make your monthly payments on time and in full. You can avoid interest charges if you pay your credit card bill in full and on time every month. Late payments can tank your credit score, and you might have to pay hefty penalty fees or interest.
- Avoid applying for several credit cards within a short time period. Generally, when you apply for a new credit card, the lender initiates a hard pull on your credit. This can ding your credit score by a few points, though the impact is only temporary. Use your credit score to gauge your approval odds before applying to reduce new card denials. Space out your applications by a month or two and you should be fine.
- Maintain a low credit utilization ratio. Experts suggest keeping your credit card balance at or below 30% of your total credit limit to maintain a strong credit score.
- Track your monthly spending. Look at your monthly statement and transactions regularly to keep an eye on your budget and make sure you’re not overspending with your card. This will also help you spot any fraudulent transactions or suspicious activity, which you should immediately report to your card issuer.
Once your credit score improves and you move on to a credit card with more benefits, you should consider keeping your student credit card account open -- even if you no longer use it.
Closing that account (especially if it’s one of the oldest accounts on your credit report) can have a negative effect on your credit score. As long as it’s not costing you an annual fee, it’s a good idea to keep the account open and use it only occasionally or set up a recurring payment that you can easily pay off each month.
Another option would be to ask if the bank can roll the credit line in with another high-rewards credit card. That way, you get to keep the credit line open to help your credit score, but it's one less card to manage.
Are you ready for a credit card?
If you’re responsible with your money, it might be time to consider a student credit card. If you consistently save and budget well, you’re likely ready to begin building credit via a credit card.
An emergency credit card can be a great way to have an additional source of funding in times of trouble -- especially if you’re going away to school for the first time.
The key to being a successful cardholder is to stay organized. Track what you’re spending, pay your bill in full each month and pay attention to the rewards program to maximize the value you get from the card.
Alternatives to a student credit card
If you’re under 18 and not old enough to have your own credit card, you can consider becoming an authorized user on a parent or other family member’s account. It’s a good way to learn the basics of a credit card without having one of your own. Becoming an authorized user can help you build a positive credit history as long as the issuer reports authorized user activity to the three major credit bureaus, Equifax, TransUnion and Experian. Keep in mind that if the primary user misuses their credit card, such as by carrying a balance or missing bill payments, your credit score could suffer from being an authorized user on that card.
If you’re looking to start building credit but feel you’re not ready for a credit card, there are some third-party companies that will report your rent payment -- for a fee -- to the three credit bureaus as a way to build your credit. Paying your student loans on time will also contribute to building credit.
If you can’t qualify for or don’t want an unsecured credit card, consider a secured credit card. In exchange for a one-time security deposit (that’s usually refundable after showing responsible use) to form your credit limit, you could start building credit.
How to apply for a student credit card
Follow these steps to apply for a student credit card:
- Choose a credit card that aligns with your needs as a student.
- Securely fill out an application by following one of the links above. You’ll need to provide personal information such as your name, age, Social Security number, address and annual income. Depending on the issuer, you may receive a decision within a few minutes or a few weeks.
- Once you’re approved for your credit card, use it to make purchases. Only charge what you can afford to pay off each month and always pay your bill on time and in full to avoid interest charges and late fees.
FAQs
No, you can apply for a student credit card if you’re unemployed. However, you will need enough income to cover any balances you accrue with your card.
Most credit cards require you to be at least 18 years old to apply. But there are debit cards designed for younger people, and some banks may allow children younger than 18 to be added as an authorized user on their parent’s credit card.
Most credit cards, student or otherwise, are accepted internationally, but some come with foreign transaction fees that are charged each time you need to make a purchase in another currency. You can technically use those cards abroad, but the fees will quickly add up. Instead, look for a student credit card with no foreign transaction fees if you plan to travel or study abroad.
Our methodology
CNET reviews credit cards by exhaustively comparing them across set criteria developed for each major category, including cash-back credit cards, welcome bonus credit cards, travel rewards credit cards and balance transfer credit cards. We take into consideration the typical spending behavior of a range of consumer profiles -- with the understanding that everyone’s financial situation is different -- and the designated function of a card.
*All information about the Discover it Student Cash Back, Discover it Student Chrome, Bank of America Travel Rewards credit card for Students, Bank of America Customized Cash Rewards credit card for Students, Chase Freedom Student credit card, Capital One SavorOne Student Cash Rewards Credit Card and Deserve EDU Mastercard for Students has been collected independently by CNET and has not been reviewed by the issuer.
This article includes some material that was previously published on NextAdvisor, which like CNET was previously owned by Red Ventures. It has been edited and updated by CNET Money editors.
