Understanding Student Credit Cards: A Comprehensive Guide

At O1ne Mortgage, we prioritize consumer credit and finance education. We aim to provide you with the best information to help you make informed decisions about your financial future. If you have any mortgage service needs, feel free to call us at 213-732-3074. In this blog, we will explore the differences between student credit cards and regular credit cards, the requirements for each, and other ways college students can build credit.

What’s the Difference Between a Student Credit Card and a Regular Credit Card?

Student credit cards are specifically designed for students who may have limited credit histories and different financial priorities compared to non-student cardholders. Here are some key differences:

Credit Limits

Student credit cards typically have lower credit limits than traditional cards. This is because students are often not at the peak of their earning potential while in school. Your individual credit limit will depend on your income and credit history, but for a student card, it could be as low as $500.

Fee Structure

Many student cards, even those that offer rewards, do not have annual fees. Some also waive the first late payment fee, understanding that those new to credit may need time to get used to paying bills regularly.

Perks

Student cards that offer cash back rewards often have categories that reflect student spending, such as streaming services, groceries, and gas. Some student cards also offer introductory 0% APR offers, meaning you won’t pay interest on purchases for a certain number of billing cycles. These perks can be valuable, especially for those with little to no credit history. Regular credit cards, however, offer a wider range of reward options to cardholders with good or excellent credit.

Regular vs. Student Credit Card Requirements

One of the biggest differences between student and regular credit cards is how to qualify. Student cards are more limited in their rewards offerings and the size of the credit line you’ll receive, but they may have less stringent credit score requirements than regular cards. Here are the major differences:

Student Status

To get a student card, you may need to prove that you’re currently attending a two- or four-year college, or that you’ve been admitted to one and will start in the next three months.

Income

According to the Credit CARD Act of 2009, if you’re aged 18 to 21, you’ll need to show that you have independent income or use a cosigner to get a credit card. However, it’s no longer common for credit card issuers to allow cosigners. Student cards often allow different sources of income to be included on credit card applications, such as grants, scholarships, or a regular allowance from parents.

Credit Score

Student credit card issuers understand that student applicants likely won’t have long credit histories. Therefore, while you often need good credit to qualify for traditional rewards cards, student cards with cash-back rewards may require either fair credit only or no credit score at all.

Other Ways for College Students to Build Credit

For some college students, a credit card may be out of reach or unappealing. If you don’t qualify for a student card or you’re worried about making purchases you won’t be able to pay off, consider these options:

Secured Credit Card

Those new to credit are excellent candidates for secured credit cards, which require a cash deposit that typically becomes your credit limit. If you fail to pay a bill, the issuer uses your deposit to make your payment. Secured cards may be easier to qualify for than student cards since the deposit minimizes risk for the issuer.

Become an Authorized User

You can also ask a friend or family member who uses credit wisely to add you to their account as an authorized user. You’ll get access to their credit history, which will populate your credit report, but you won’t be legally responsible for making credit card payments.

Try Experian Go™

If you are completely new to credit, Experian Go can help you establish a credit report and get credit for bills you already pay, such as cellphone, utility, rent, insurance, and streaming service bills.

Make All Student Loan Payments on Time

If you have student loans, you already have the opportunity to build credit. When you make every student loan payment on time upon graduation or leaving school, your credit should improve. But that means, while in school, borrowing only what you know you’ll be able to afford paying back.

Frequently Asked Questions

Do Student Credit Cards Build Credit?

Yes, student credit cards can help you build credit. By using your card responsibly, making payments on time, and keeping your balance low, you can establish a positive credit history.

How Long Can You Have a Student Credit Card?

You can typically keep a student credit card as long as you are a student. Some issuers may allow you to keep the card after graduation, but you may want to consider upgrading to a regular credit card with better rewards and higher credit limits.

Who Can Apply for a Student Credit Card?

Generally, you need to be a student enrolled in a two- or four-year college to apply for a student credit card. Some issuers may also require proof of enrollment.

Can You Get Approved for a Student Credit Card Without a Job?

Yes, you can get approved for a student credit card without a traditional job. Student cards often allow different sources of income to be included on credit card applications, such as grants, scholarships, or a regular allowance from parents.

The Bottom Line

If you’re ready to use credit for the first time, with all the long-term repercussions that entails, a student credit card is a worthwhile option to consider. Compared with traditional credit cards, they may be easier to get and carry less risk in the form of lower credit limits. But no matter the type of credit card you choose, the best practices are the same: Make all payments on time and keep your spending as low as possible to build a credit history that will benefit you for years to come.

For any mortgage service needs, don’t hesitate to call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.