College Student Credit Cards Guide
Getting your first credit card as a college student allows you to start building credit history and earn cash back or travel rewards on your spending. But finding the right student credit card takes research.
In this comprehensive guide, we’ll cover tips for choosing your first card, average credit limits, rewards programs, fees to avoid, and managing your payments responsibly as a student. Let’s explore how students can maximize the benefits of their first credit card.
Benefits of Student Credit Cards
Here are some of the key advantages student credit cards offer:
- Build credit history – On-time payments help establish your score
- Earn rewards like cashback and airline miles on purchases
- More secure than debit cards if the card number gets stolen
- Don’t have to carry cash for student expenses
- Learn financial responsibility while still on a limited budget
- Establish creditworthiness for future car loans, apartment rentals, etc
However, the risks of overspending and getting into credit card debt as a college student are very real. Financial prudence is required.
Finding the Best Student Credit Cards
Here are some factors that make a credit card ideal for college students:
- No annual fee – Avoid fees adding expenses
- Cash back rewards – Simple earning structure
- 0% intro purchase APR – Interest-free grace period
- No foreign transaction fees – For study abroad charges
- Soft credit check when prequalifying – Won’t hurt your credit score
- Reporting to all 3 bureaus – To build credit history
- Low credit limit – Lessens opportunity for big debt
Top issuers like Discover, Bank of America, and Capital One offer solid student card options worth comparing.
Average Credit Limits for College Students
Typical starting credit limits for student cards are:
- $300 – $500 for those with no credit history
- $500 – $1,000 for those with a limited history
- $2,000 – $3,500 for those with moderate history like loans
Your income, existing open accounts, credit score, and debt burdens impact limits. Manage starter limits responsibly before requesting higher ones.
How Student Rewards Programs Work
Cashback and travel rewards programs require good behaviors to maximize benefits:
- Activate bonus categories each quarter for accelerated earn rates
- Pay your bill on time and in full each month to avoid interest
- Learn redemption thresholds, methods, and expiration policies
- Review statements routinely to ensure rewards post as expected
- Redeem your rewards at least annually so they don’t expire
- Track any referral bonuses you receive from friend sign-ups
- Look for limited-time spending challenges and bonuses
Student cards offer simplified rewards compared to premium cards with fancy perks. Focus on cashback given limited budgets.
Watch Out for Prepaid Debit Cards
Prepaid debit cards branded by payment networks like Visa and Mastercard may seem similar to credit cards but work differently:
- They aren’t linked to your financial accounts – you prepay the balance
- No interest or credit checks as you can’t take on debt
- Safest for avoiding overspending but no credit history benefits
- Often have fees for ATM withdrawals, reloads, activity, etc
- Limited fraud protections compared to true credit cards
Avoid prepaid debit cards and consider student credit cards tied to major banks instead.
Compare Fees Carefully
Watch out for these fees with student credit cards:
- Monthly or annual fees – Opt for no annual fee cards to avoid this cost
- Cash advance fees – Don’t use cards for ATM withdrawals or cashback
- Foreign transaction fees – Choose a card with no forex fees if studying abroad
- Returned payment fees – Avoid by enrolling in autopay
- Late payment fees – Set calendar alerts for due dates
- Overlimit fees – Don’t charge over the approved limit
- Balance transfer fees – Move high-rate balances only if there’s a low introductory rate
Manage Monthly Payments Responsibly
To develop strong financial habits with your first card:
- Use it for planned expenses within your budget like gas and books
- Avoid unnecessary impulse purchases just because you have a credit line
- Pay at least the minimum by the due date to avoid late fees
- Set up autopay from your checking account for the statement balance
- Review charges routinely to catch any unauthorized activity
- Learn the true costs of only making minimum payments
- Pay in full each month to avoid costly interest charges
Credit cards charge high rates compared to alternatives like student loans. Avoid debt!
Maintain Low Utilization as a Student
To keep a strong credit score:
- Use less than 30% of your total available credit monthly
- Try to keep individual card balances under 10% of that card’s limit
- Pay down large purchases quickly to lower utilization again
- Request credit line increases after 6 months of responsible usage
- Avoid maxing out your limit to minimize impact on credit
Keep balances low through on-time payments. Carrying high balances signals risk.
Choose a Student Card That Reports to Credit Bureaus
To build history, your student card should report payment activity to Equifax, Experian, and TransUnion.
Many student cards only report to one bureau, limiting profile development. Opt for one that reports to all three to maximize history depth.
Graduate to Better Rewards Cards Over Time
Once you’ve managed a student card responsibly for a year and have income, consider upgrading your rewards potential by opening a new card like:
- Chase Freedom Flex for rotating 5% cashback categories
- Citi DoubleCash for unlimited 2% back on every purchase
- Chase Sapphire Preferred for flexible travel rewards
Set calendar reminders to reevaluate your card choice each year as your credit improves and expenses change.
Closing Student Accounts After College
Should you eventually close student cards? Here are some factors to consider:
- How old the card is – Keep your first card open indefinitely to anchor your credit history
- Annual fees – Close cards charging annual fees unless the rewards outweigh the cost
- Utilization impact – Closing a card lowers your total available credit which can increase utilization
- Lost rewards history – Your length of credit history takes a hit if you close old accounts
- Credit inquiries – Closing won’t impact your report but getting new cards will cause hard inquiries
Aim to keep longstanding cards that don’t charge an annual fee. The oldest accounts are valuable credit history anchors.
Final Tips for Student Credit Cards
Here are final tips for maximizing value from your student credit card:
- Shop APRs across multiple student cards to choose the lowest rate
- Review credit card agreements closely to understand fees and policies
- Always pay at least the minimum monthly payment by the due date
- Set up account alerts for key activity like charges over $100
- Create a realistic budget including your projected credit card spend before getting a card
- Avoid card usage unless you already have the cash to pay for planned purchases
- Be cautious about accepting credit line increases to avoid overspending
Choosing the right student card and using it judiciously lays the foundations for financial health as you embark on adult life. Credit cards maximize convenience and rewards when handled responsibly.
Concluding Thoughts on Student Credit Cards
The college years mark a pivotal time to make mistakes and learn critical money management skills with supervision from parents or guardians before graduating into full financial independence.
Approach your first credit card with care by paying balances dutifully, avoiding impulse purchases, and monitoring statements for fraud. This establishes healthy habits that will serve you well.
Maximize the benefits of credit cards but minimize risks. Limit applications and volume of accounts. One student card used prudently opens the door to achieving your financial goals down the road.