What is a student credit card?

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Whether you’re an undergraduate, graduate, or non-traditional student, using a credit card that meets your needs is a great way to manage your money while juggling a student’s workload. Establishing a positive credit history early can also have a significant impact on many important life milestones, such as applying for your first apartment, buying your first car, or getting a job. a mortgage loan.

Here’s what you need to know about student credit cards and how best to use them to your advantage.

What is a student credit card?

A student credit card works much like any credit card, but with rewards and features specifically tailored to the needs of the student. Student credit cards are generally much easier to approve because most students applying for their first credit card often have limited or no credit history. These cards also offer rewards for student-centric purchases, such as streaming subscriptions, dining, or Amazon spending.

You don’t have to be a student to apply for a student credit card, but keep in mind that you must meet certain eligibility requirements depending on the issuer.

Reasons to Get a Student Credit Card

As with any credit card, student credit cards have notable pros and cons. If you use your student credit card responsibly, you’ll be well on your way to building good credit and building strong financial habits.

With student credit cards, even students without a credit score can be approved. Some student cards take a more lenient stance on late payments by not charging late fees on your first failure, although missing a credit card payment will negatively impact your credit score , whatever happens.

The Discover it® Student Cash Back card, for example, waives your first late payment fee, but late fees can reach $41 thereafter. This gives young adults a safety net while learning the do’s and don’ts of credit.

Plus, a variety of student cards offer cash back on popular student spending categories like meals, entertainment, and gas. Some cards offer additional benefits like purchase protection or credit-building tools to help beginners with credit.

For example, the Capital One SavorOne Student Cash Rewards Credit Card offers 8% cash back on Capital One Entertainment purchases and tickets at Vivid Seats, 5% back on hotels and rental cars booked through Capital One Travel and an unlimited 3% discount on dining, entertainment, popular streaming services and at grocery stores (excluding supermarkets like Walmart and Target). A student card like this offers huge rewards for nearly every spending category on most young adults’ plates.

In addition to rewards and eligibility requirements, many student credit cards do not charge an annual fee. Many student cards also benefit study abroad hopefuls by waiving foreign transaction fees, but you should always check the terms and conditions of the card.

The risks of a student credit card

Student credit cards also have drawbacks to keep in mind. Don’t go blind as you might encounter surprises along the way.

Card issuers generally view students as high-risk borrowers, which often leads to higher interest rates on student credit cards. TAEG student card average more than 17 percent, according to CreditCards.com, so if you miss a payment or two, the interest charges will add up pretty quickly. However, as long as you make on-time payments on your credit card each month and pay off your balances in full, you’ll completely avoid the extra interest that comes with those higher rates.

In addition to high interest rates, issuers generally give lower credit limits with student credit cards. Once you are able to demonstrate your creditworthiness with a consistent and on-time payment history, your issuer may automatically increase your credit limit or you may contact your issuer and request a higher credit limit. But until then, you’ll usually end up with a low credit limit. That’s not a bad thing because there’s less room to spend beyond your means.

Student credit cards are best suited for undergraduate, graduate, or non-traditional students looking to build a credit history from scratch and want student-focused spending rewards. If you are not a student but still hope to build or rebuild your credit, you may consider applying for a secured credit card or another card option that best matches your current credit level.

Student credit cards can become restrictive as you build your credit history and become eligible for cards with better rewards and benefits. Fortunately, many issuers offer cards that are easy to upgrade once you’re no longer a student.

Apply for a student credit card

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

  1. Know your credit score. Your credit score is the key to knowing which cards you might 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 issuer’s site and search for the app. Once you’ve found the card that works best for you, set up the necessary accounts and locate the card app of your choice.
  3. Ask for the card. Gather and enter all necessary information for the application, such as your name, address, and annual income. If you’re wondering what to enter for your annual income, consider things like salary from your part-time job, scholarships, grants, and regular allowances.
  4. Expect a candidacy decision. An application decision can be instant or 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 additional interest charges. You will then receive the physical card by mail.

Age requirements for a student credit card

The minimum age to be a primary cardholder for most card issuers is 18, but there are some requirements for people under 21 to keep in mind if you’re considering applying for your first card. credit.

If you are under 21, it is possible to get approved for a credit card, but most credit card issuers will require you to show proof of income. If you are at least 18 years old and do not have the required income to be approved for a credit card on your own, you will need to apply with a co-signer or consider a secured credit card.

3 ways to use your student credit card

That’s it, you’ve acquired your student credit card and you’re ready to use it. Here are the three best ways to use your new card:

  1. Building credit. A student credit card is one of the easiest ways to start building a credit score. When used responsibly, the good credit score you build with a student card could lead to better credit card and loan choices with lower interest rates.
  2. Earn rewards. As long as you have your spending under control and pay your bill on time and in full, student cards are a great way to earn rewards on the purchases students make the most.
  3. Emergency room. Life happens, and when it does, a student credit card can be a welcome safety net that you can use to cover unexpected expenses, like a trip to the mechanic or the emergency room.

However you decide to use your new card, continue to prioritize paying the balance each billing cycle. If you can’t pay off the card in full, be sure to pay the required minimum by the payment due date to avoid late fees or major impacts on your credit score.

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 choose a card that best suits your unique financial needs.

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