Should I get a credit card as a college student? | Roost
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Should I get a credit card as a college student?

When you go off to college, you make a lot more decisions completely on your own – when (or if) you go to bed, which classes to take, where to go for spring break. As an independent adult, you’re also responsible for making choices around how you build and manage your credit and financial history. The critical thinking skills you’re learning and leveraging at school can also help you determine whether or not now is a good time to student credit card as you head off to college.

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Pros of getting a student credit card 

Cover expenses

One of the perks of having a credit card is that you’re able to buy stuff or cover a cost even when you don’t have the cash on hand. For example, if you don’t get paid for another few days or you’re waiting on student loan money to come through, and your electric bill or a car repair is due, a credit card can come in handy.

Just remember that if you only pay the minimum balance on the card the unpaid portions carry over to the next month and accrue interest. This can quickly create a snowball effect and a payment you can’t afford. 

Avoid this by setting a strict spending budget or having a gameplan so you can make your payments every month.

Potential to build a good credit score

One of the great things a credit card can do for you is build your credit. Your credit score helps you do all sorts of things. Buy a car, rent your first apartment, and one day, get a mortgage and purchase your own home. Using your credit card wisely as a college student builds your credit history and can improve your credit score.

Some of the data used to create your credit score:

  • Paying bills on time.
  • Credit utilization rate (i.e., how much of the credit available to you, you’re using each month).
  • Length of credit history.
  • Managing multiple types of credit at one time. 

The longer your credit history the better, so getting a credit card in college versus when you’re 23 can add a few years to your credit history. 

As long as you’re paying on time, and not maxing out your cards, you should be able to have at least a fair credit score by the time you graduate.

Rewards and perks

Many cards offer cashback or other rewards for everyday purchases that wouldn’t be available to you if you used cash or a checking account. Depending on the card, you may be able to get points for airline travel or hotels, discounts on certain stores, and even protection for your newly purchased cell phone. 

Plus, credit cards are a more secure way to pay for purchases than debit cards or bank accounts, especially if you do most of your shopping online—and honestly, who doesn’t do their shopping online anymore?

Cons to getting a student credit card

Low limits

Typically, credit card companies will start a college student off with a lower credit limit. Their logic is that because you haven’t had a credit card before, you’re a higher risk. While a lower limit may not be what you had hoped for, it can actually be a pretty good thing. You’ll get the hang of purchasing and paying things back and build up your limit over time. 

Outside of tuition and housing, you shouldn’t have a lot of high expenses beyond paying for books and supplies as well as food if you live off-campus. A $500 limit should be more than enough, especially if you aren’t working.

Potential to harm your credit score

In the same way that a student credit card can help you build good credit, if you use your card irresponsibly it can hurt your score. For example, not paying by the due date or maxing out your card limit regularly, can hurt your credit score

If you think you won’t be able to afford at least the minimum payments or can’t make payments on time it may be wise to wait to apply. At the very least, consider using a combination of a student credit card and another payment method for your day-to-day purchases.

If you already find yourself accumulating credit card debt that you would like to pay off companies like Tally have programs tailored to help out.

High-interest rates

Student credit cards typically carry higher interest rates than conventional credit cards. If you pay off your balance in full each month, the interest rate doesn’t matter because no unpaid balance is being rolled into the next month. There is no amount due for interest to accumulate. 

But if you wind up short and can only make the minimum payment, or any amount less than your statement balance, you’ll be charged interest on any amount that you didn’t pay off. 

Student credit cards usually have high-interest rates. Many are upwards of 20%.

It’s easy to see how you’d fall behind when you’re billed for the remaining balance of the amount you couldn’t pay and the interest on that balance in addition to any purchases made for the current billing cycle. Late payments will mean a drop in your credit score.

What types of credit cards are for college students?

Student credit cards

Student credit cards are a type of revolving credit card, but they are specifically tailored for college students. Card issuers know that many college-aged adults may not have the income requirements or credit history to qualify for a conventional credit card. 

That’s why they created a special student credit card category- just for you! 

Because most college students don’t have a full-time job, card issuers may have lower credit limits and heftier fees for late payments. 

On the bright side, lots of student credit cards may offer perks based on, say, how good your GPA is, like cashback or free Amazon Prime for students (saweeet!).

Revolving card

Revolving cards are those that you most traditionally think of as credit cards. These are accounts with an ongoing line of credit that is available as long as the applicant stays in good standing with the company or until they close the account. 

This line of credit is used and then paid down in a repeated cycle.

If you’ve already built up a substantial credit score by making payments on a car loan, for example, you may already have a fair or even good credit score. If this is the case, kudos to you. 

Co-signed card

If you’re unable to qualify for a credit card by yourself, you may have better luck getting an application for a co-signed card approved. A co-signer is someone legally responsible for making the payments if you can’t or don’t. 

Remember, you’re asking a co-signer to take a huge risk on you. If you don’t pay your credit card bill on time, or not at all, you are hurting the credit score of someone else.

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Authorized user

If you can’t find a co-signed card you may want to consider becoming an authorized user on someone else’s (ahem, mom or dad) credit card. Authorized users can legally make purchases using the cardholder’s line of credit. 

You can begin to build a credit score as an authorized user but choose your cardholder carefully. If they don’t have very good credit you might be hitching your credit wagon so to speak to the wrong star.

Roost Tip! Be careful about who you choose to share finances with. How well do you know them? How reliable are you? Will you both positively impact each other’s credit history?

Secured credit card

Secured cards are ones that you pay a security deposit on which is used as collateral. Then you are given a line of credit (often for the same amount as the deposit you paid). 

Companies do this to minimize risk. If you find yourself unable to pay, they’ll be able to take your security deposit to cover the amount owed.

It’s kind of like having a mini-emergency fund managed by a credit card company. These are typically best if you are trying to establish credit or are recovering from a bad credit score. 

Chime’s Credit Builder card is a great secured credit card because there is no interest or annual fees, no credit check to apply, and no minimum security deposit required.

A secured card is a great stepping stone. It proves to card issuers that you can handle a small line of credit responsibly and puts you in a position to transition to an unsecured or conventional revolving credit card. 

5 questions to ask before applying for a student credit card

Why do I need this now? 

Am I looking for an easy way to pay for essentials and can pay it back every month or am I regularly struggling to pay for essentials that I need? 

What will I use my student credit card for?

Before applying, set some rules for yourself on what you are allowed to use your credit card for.

What’s my income? 

Am I actually making enough money to pay off the statement balance each month? Will I just make things worse for myself by hurting my credit score?

Can I stick to a budget?

Be honest! It can be way too easy to let your spending get out of control – is now the right time for a credit card?

What’s my credit score?

A lot of college students probably don’t know what their credit score is. It doesn’t hurt to find out before you start applying for a credit card because each application will be a hard pull on your credit score. (A hard pull can temporarily bring your score down. If you’ve already got a low score you might want to avoid pushing your luck.)

Research credit cards

There are lots of factors to consider when comparing cards as a college student. Some important aspects to think about include:

  1. Is there an annual fee?
  2. How much are the late fees?
  3. How much is the interest rate?
  4. Is cashback, reward points, or airfare miles the most important perk for you? How about the way these are redeemed?
  5. Are feeless ATM withdrawals important? How about the ability to make international purchases without penalty?
  6. Does the company have a good reputation? 

With the options available right now, it can be a bit overwhelming to decide on what a good fit might be. That’s why we’ve put together this handy list of the best student credit cards. We know you’re busy enough researching for your classes; we figured we’d make it easy for you. 

Consider alternatives to a student credit card

If you did your research and decided that a student credit card is not currently the best option for you, you may find these alternatives are a better fit:

Prepaid cards

These are slightly more secure than cash as some providers offer protection should the card be lost or stolen. They require no credit check or bank account. Simply load funds onto the card, much like you would a gift card. 

This gives you the flexibility to make online purchases without a debit or credit card. Some prepaid cards come with the ability to have paychecks deposited directly onto the card.

Debit cards

To use a debit card, you must first have a checking account with a bank or credit union. If you’ve already established a relationship with a bank when you were in high school, you may be a simple step away from the convenience of a debit card. 

Ask your financial institution about how to get a debit card if you don’t already have one. 

Just remember, debit cards aren’t building credit and they are linked to the funds in your checking account. They can also be riskier to use, especially for online purchases. 

Student credit cards build credit while you build your life

Student credit cards can be a great way to build credit while helping you cover expenses on a tight budget. They can also help you build good budgeting and spending habits. However, credit cards can also do serious harm if you let your balance get out of control or don’t make the payments, so make sure you have the income and a gameplan to pay it back.

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A quick note! Our goal is to gather and share info that’s up-to-date and helps you make great decisions as a renter. That said, the information you get directly from a provider could be a little different. Make sure to review their terms and conditions directly; and, if you see anything here that needs to be updated, please let us know! Advertising disclosure
Last Updated: August 28th, 2023