There’s no denying that having a solid credit score can be essential as one enters their adult life. Major life decisions will be made on the basis of this score, which is why it’s important to start thinking about building credit early.
Far too many Americans aren’t familiar with the ins and outs of credit scores, and we need to do a better job at educating our youth about the importance of maintaining good credit.
One of the best ways to do this? Starting them out with good credit cards for students. A great student credit card can help young adults learn about responsible financial spending and begin building their credit history.
What do you need to know about these cards and what are the best options out there for students? Read on and we’ll walk you through what you need to know.
What Is a Student Credit Card?
What is a student credit card, exactly? The name can be something that is a bit misleading, as you don’t actually have to be a student to get one. Even if you are a student, you might not actually be eligible for one.
Student credit cards are intended for individuals who are between 18 and 21 years of age. While this is generally the age of a college student, those who are not in school can still apply for them.
An applicant must also have a limited credit history, which is why students over the age of 21 are often not actually eligible.
There are other requirements applicants for this kind of credit card will need to meet. These requirements are in place to help protect young students from the potential greed of credit card companies.
Applicants younger than 21 must have some form of independent income coming in in order to apply. A full or part-time job, for example, would do the trick. Alternatively, they could have an adult or guardian sign on the card as a co-signer.
This co-signer would pay the credit card bill if it turns out the student themselves is unable to. That removes the risk for the credit lender and prevents the student from building bad credit and debt early on.
One must also have a social security number to apply, which can make it difficult for international students to obtain a student credit card.
If you’re not eligible for this kind of credit card but are still looking to build early credit, a secured credit card may end up being the best option.
Also Read: 7 Tips for Improving Your Credit Score Fast
Choosing the Best Credit Card
There are tons and tons of options out there when it comes to student credit cards. Essentially, every major company and many others offer some form of this type of credit card.
While this can be advantageous for students and offer many different opportunities, it can also be a tad overwhelming. With so many options, how can whittle down the choices and decide which student credit card is the one to go with?
It’s best to think about the different benefits that these cards may provide, and prioritize which factors might be most important to you or your student.
Major Factors to Consider
Student credit cards offer all sorts of incentives, credit card rewards, and opportunities. However, you want to keep your eye on the prize, not on the flashiness.
The point of having a student credit card is to build good credit early on, and you’ll want to ensure you sign up for a card that will allow you to do just that.
With this in mind, the main thing you’ll want to look for is a student credit card that does not have annual fees. Some credit cards require a yearly fee to remain a cardholder. You don’t want one of those at this time.
A credit card with an annual fee is not going to be compatible with a student budget, and the last thing you’ll want is to put more financial pressure on yourself at this time.
Many student credit cards come without an annual fee, so there’s no reason to consider paying this extra cost at this juncture. Once your credit history is established, you can begin looking into these types of cards, but this isn’t the time.
You’ll also want to ensure that the student credit card you select reports to all the major credit bureaus.
The three major credit companies, Equifax, Experian, and TransUnion, are the outlets that will create and provide your credit score. The higher the score is in the eyes of these companies, the higher creditworthiness you’ll experience.
The whole point of getting this credit card is to boost that score, so you’ll want to ensure you’ll get a card that won’t skimp out with any of the bureaus.
Rewards and Incentive Offers
Student credit cards tend to be less generous when it comes to incentives, rewards, and other such programs. This is because credit card companies know they don’t need these offers to lure in customers, just the opportunity to build credit is often enough.
However, you might find a few options out there that do offer some kind of reward. As long as they don’t come at the expense of the more important features of this kind of credit card, they might be well worth looking into.
Rewards with student credit cards might come in all sorts of shapes and sizes. Some credit cards offer cashback on purchases, putting a small sliver of a percentage of your purchase and awarding you free cash at the end of the month.
Other credit cards might offer sign-up bonuses, which are discounts on your initial bill payments in the form of cash. This can help you to save money while still building up your credit history.
Some credit cards may offer miles or traffic rewards, but these will be rare when it comes to student credit cards.
Late Payment Fee Waivers
The whole point of a student credit card is to bolster credit, not to ruin it. With this in mind, some student credit cards may have systems in place to help ensure that a user’s credit score stays in a solid place.
Some student credit cards will offer a few limited late fee waivers, which will allow the student a pass if they are late on paying their card in one or two instances.
These can be viewed as almost a get-out-of-jail-free card, allowing the student to make a mistake without having to actually pay the penalty for it.
Not all student credit cards will come with these waivers, but those that do will be well worth considering. You can read this detailed article to learn more about the credit card options out there that allow for this, as well as other important benefits.
Financial and Educational Resources
Many student credit cards also offer certain resources that are intended to help students with their overall financial literacy.
Many credit cards have budget applications built-in that serve to help students track their spending over the course of a month or even a year. Students can use this resource to see where their money goes and what types of purchases they spend the most on.
They can even set goals and limits on various categories and work towards a more sustainable budget in this way. Learning how to budget can be a huge and helpful skill for a young person, and the best credit card will make it even easier for students.
Many of these credit cards will also come with credit score monitoring. This is a system that looks out for the student and will alert and warn them if their credit score is starting to sink.
This can help students to course-correct early on before any too-serious mistake is made.
Last but not least, some credit card companies may even offer free online resources to cardholders. This can include helpful financial literacy information, personal finances classes, and 24/7 helplines.
Ideally, no student should feel lost trying to build healthy financial habits. The resources these types of cards provide should help provide a clear path forward for all, no matter their experience or background.
Selecting Good Credit Cards for Students
If you’re thinking of opening a credit card in the near future, you might be stumped as to where to start. If you’re building credit for the first time, getting to know about good credit cards for students can help to set you down the right path to success.
The above information can help you learn what makes a solid choice for a credit card and which might be best to avoid.
Need more personal financial advice? Keep scrolling our blog for more.
Mashum Mollah is the feature writer of Search Engine Magazine and an SEO Analyst at Real Wealth Business. Over the last 3 years, He has successfully developed and implemented online marketing, SEO, and conversion campaigns for 50+ businesses of all sizes. He is the co-founder of Social Media Magazine.