Frequently asked questions about student credit cards
If a young adult enrolls in a college and has a financial life with a credit card, then it recommended to avail student credit cards. Many issuers offer these student credit cards and are specifically designed for students or those who are new to using credit cards.
However, you should have a thorough knowledge of the function and purpose of these student credit cards. There are five things you need to know about a student credit card.
What is a student credit card?
Student credit cards are marketed with the target audience being students in college or universities who have never had a credit card in their name. This allows for the solving of the problem of not getting cards without having a credit history. The issuers target these high-risk students due to some studies that have shown that around 38% students did not change cards for at least 10 years.
The benefits for students includes having positive credit before school, which will in turn help in gaining credit elsewhere. In addition, financial institutions ensure that these students are well informed about the benefits and help them become better loan borrowers in the future. Some financial institutions also provide incentives for students who excel in academics.
How to qualify?
The eligibility for student credit cards depends on some basic requirements. The obvious one is that you need to be a student in a college or university. Age is another factor. One must be above 18 years to be eligible for using the card. Moreover, to be the sole owner of the account, he/she must demonstrate the ability to make payments or have co-signer until the age of 21.
How to become a responsible borrower?
There are few steps you can take for this:
- Read the statements once a month to know spending patterns and spot problems.
- Conduct all credit business online as students living in groups could lead to fraud.
- It is recommended to use the card only for purchases for self and not for your friends.
- Knowing your credit card limits is key since an issuer can levy an over limit fee of around $25–35 or an APR hike.
- Understanding your payment history and credit utilization will help you estimate your credit score. It is important to pay your dues on time as late charge fees or increase in APR might put you in a debt cycle.
- Handling your student credit card in a proper way would help you build credit scores that would be helpful for future loans and credit cards. This is applicable once you have a steady income to repay the credit/loans.
Which are the most popular student credit cards?
There are many issuers of student credit cards. The 3 popular credit cards below:
Journey®️ Student Rewards from Capital One®️: The cards give 1% cashback on all purchases with a 0.25% extra bonus on the cash back you earn each month you pay on time, making it total of 1.25% cash back. There is no limit on the amount to be spent for cash backs.
This card is a low-fee student credit card, and you can redeem the rewards on statement credit or check in $25 increments. In addition, if you pay for 5 months on-time, you will get an extended credit line with no annual fee. However, there is no introductory APR with regular APR being at around 24.99%, late fees cost up to around $38, and there is a 3% charge on cash advances. You can apply for this student credit card on their official website.
Discover It®️ for Students: Discover It®️ for Students has similar benefits to the Standard Discover It®️ Card. They offer 1% cash back on all purchases with no spending caps or restrictions. Purchases are rotating spending categories, such as a department store or gas stations, will earn up to 5% cash back with a quarterly limit of around $1500.
You can redeem cash in any amount a statement credit, bank account deposit, check, or Amazon credit purchases. The other benefit is that cardholder automatically doubles your cash back with an addition $20 cash back every year if your GPA is above 3.0 for up to 5 years. The introductory APR is 0% for 6 months with the regular APR ranging from 14.49% to 23.49% with no annual fees. You can apply on their official website.
Citi ThankYou® Preferred Card for College Students: You can earn around 2500 points as a bonus for spending $500 in first three months with $25 redeemable gift cards. You can also earn 2X points for dining out and entertainment. The introductory APR is 0% for 7 months on purchases with the regular APR ranging from 15.99% to 25.99% with zero annual fees. You can apply on their official website for the same.
You can have a positive credit history if your repayments are on time. By doing this, you will be avoiding yourself from getting into a debt cycle.