Definition and Example of Student Credit Cards
Student credit cards are designed for young adults who are enrolled in college and who may be just starting out with credit. Although they share a lot in common with other credit cards, they have some features that are tailor-made for students. Some of these features are required by law. These cards often have less stringent credit requirements than regular cards because most student applicants tend to have weak or nonexistent credit histories. Someone who’s attending college who has never had a credit card before may be able to open a student credit card with a credit union or bank. They can then use the card to build their credit history by making purchases and paying down their balance.
How Student Credit Cards Work
As with other credit cards, students must be 18 years or older to comply. The credit card application may ask you for specific details about your school enrollment to confirm your student status. This might include your year in school and your expected graduation date. You may have to provide proof of your enrollment status to qualify. You’ll also have to prove you have the financial means to pay off a credit card, whether it’s through your income or your assets. Non-student credit cards don’t require graduation details or school enrollment. The typical application asks for your basic information, income, and mortgage or rent payments. In many cases, rewards credit cards will require better credit from applicants than student credit cards. Colleges and universities could enter into lucrative marketing agreements with credit card issuers to provide student contact information prior to the Credit Card Act of 2009. They could allow access to campus events. The University of Iowa Alumni Association disclosed that it received around $1 million in annual revenue just from one credit card issuer in 2008. The 2009 law requires that schools disclose to the public and to the Consumer Financial Protection Bureau any marketing agreements with student credit card issuers. This transparency helps students make informed decisions about credit cards that are pitched to them by school-affiliated organizations. In addition to disclosing any financial relationships, credit card issuers are not allowed to give out gifts, like a free T-shirt or pizza, in exchange for a student completing a credit card application on or near campus or at any school-related event. These types of incentives could lead students to make a decision about a card just because of what they get in return, not because of what the card offers or doesn’t offer.
Student Credit Card Rewards
In most cases, student credit cards that offer rewards tend to have lower rates and bonuses than non-student credit cards. Capital One’s card offerings are a good example. The Journey Student Credit Card has a 1% cash back rate that jumps to 1.25% if you pay your bill on time. The non-student Quicksilver card requires excellent credit but has a 1.5% cash back rate and a $200 bonus for new card members if you spend $500 in the first three months.
Upgrading Your Card After Graduation
You may want to close your student card and get a better rewards card after you’ve graduated, but keep in mind that keeping your first credit card open can benefit you. Your credit age (the amount of time you’ve been using credit) contributes 15% to your credit score. Having your oldest credit card open for a long period of time boosts your credit score by showing that you have more experience using credit. Start by calling your credit card issuer after you’ve graduated to find out whether you can upgrade your card. Converting to another product with the same credit card issuer would allow you to keep your account history, a factor that could help maintain your credit score.
Alternatives to a Student Credit Card
Young adults who want to jumpstart their credit still have options if they aren’t in college, don’t have independent income, or have been turned down for a student credit card. You can become an authorized user on someone else’s credit card. You’ll have the ability to make purchases as an authorized user if the primary cardholder allows it, but no responsibility to make payments. All the card’s payment history is added to your credit report after you’ve been added as an authorized user. This helps boost your credit score, allowing you to qualify for your own credit card. A secured credit card is another option. You’ll have to make a deposit that will serve as collateral for your credit card balance, but you’ll get your deposit back as long as you keep the account in good standing. You may be able to convert to an unsecured credit card after several months of responsible use, depending on the card you choose. You could apply for an unsecured card once you’ve built a strong payment history even if you don’t have the option to convert the card.
How Much Does a Student Credit Card Cost?
Student credit cards come with all the same fees (late fees, returned payment fees) that regular credit cards have, and the rates and amounts are typically the same. For example, the Bank of America Travel Rewards for Students and the Bank of America Travel Rewards have the same annual fee ($0), balance transfer fee (3% or $10, whichever is greater), and late payment fee ($40). When it comes to the annual percentage rate (APR), student credit cards tend to have rates lower than or equal to the issuer’s non-student cards. The two Bank of America cards have the same APR and the same introductory APR offer. In fact, student credit cards tend to have the lowest average APR of all consumer credit cards, according to our monthly survey of average credit card interest rates. But there will be exceptions. The Journey Student Rewards from Capital One’s APR is considerably higher than the best APR the Quicksilver card offers.
Pros and Cons of Student Credit Cards
Pros Explained
Students may be able to qualify for a credit card despite having new or thin credit: Capital One Journey allows students to qualify with fair credit.Fraud protection can make credit cards safer than using a debit card: Your maximum liability for unauthorized debit card charges is $500. Many credit cards have zero liability protection, which means you won’t be responsible for any fraudulent charges made to your credit card.Access to rewards that cater to students: The Discover It Student credit card offers rewards for good grades.Good interest rates: Student credit cards tend to have the lowest average interest rates among consumer cards, which reduces your costs if you have to carry a balance.
Cons Explained
Certain student credit cards may have high interest rates: The Capital One Journey Student card has an APR of more than 25%, which is significantly higher than the average student card APR.Student credit cards aren’t a long-term solution: These cards are more like starter cards that can help you understand the basics of credit, interest, and rewards. You might be able to qualify for cards with better 0% APR offers, more features and benefits, and higher rewards rates as your credit score strengthens. But keep your student card open. A zero balance on a credit card can help your credit score, as will the age of the account.
title: “What Is A Student Credit Card " ShowToc: true date: “2023-01-26” author: “Jason Wilson”
The rules are a little different for young adults applying for a credit card, so getting a student credit card has a few extra requirements. Learn more about how to get a student credit card.
Definition and Example of a Student Credit Card
A student credit card is a specific type of credit card with features and benefits specifically for college students. Cardholders can charge purchases to their student credit card and pay for them all at once or over time. Some student credit cards offer bonuses and rewards. The Discover it Student Cash Back, for instance, offers a “Good Grade Reward” that rewards cardholders with a $20 statement credit each year they have a grade-point average (GPA) of 3.0 or higher.
How Student Credit Cards Work
Student credit cards work just like regular credit cards, but they may also have features and benefits designed specifically for students. The rules for opening a student credit card are mostly the same as for regular credit cards. The difference, with some credit cards, is the requirement to provide proof of enrollment status to qualify for a student credit card. Other than that, students must be at least age 18 to apply and will need to meet the credit qualifications for that card. Students under age 21 must have enough income to repay a credit card balance or apply with a co-signer. That income could come from a job, parent, or even financial aid.
Alternatives to Student Credit Cards
If you can’t qualify for a student credit card because of your age, school enrollment status, or income, you have other options for getting credit or making electronic purchases.
Secured Credit Card
A secured credit card allows you to make a deposit as collateral for the credit limit. You’ll make purchases and payments just as you would with a regular credit card, but the card issuer hangs on to your deposit in case you default on the card. As long as you keep your account in good standing, your deposit will be refunded when you close the account or upgrade to an unsecured card.
Authorized User
As an authorized user on someone else’s credit card, you can make purchases, but the credit card issuer won’t require you to make payments. A parent, relative, or friend can add you to an existing credit card to give you access to their account for spending or to help you qualify for a credit card of your own.
Prepaid Card
While a prepaid card won’t allow students to build credit, it does offer the ability to make electronic purchases, similar to a student credit card. Opening an account doesn’t require a credit check or bank account. Students can load funds to their card and spend up to the balance loaded on the card.
Student Credit Card Fees
Student credit cards carry the same fees as regular credit cards. Most are based on how you use your credit card, which gives students control over credit card costs. Here are some fees you may encounter with your student credit card—or with any credit card:
