Student credit cards are explicitly designed for students who have limited or no credit history. A primary reason you might want a student credit card is to begin building your credit history. Companies that offer these cards are trying to help students get ready for the real world.
Most cards have a low credit limit, so lenders do not risk much if you mess up on making payments. Paying your bill each month can help you establish proper credit and show just how responsible you can be with money. There are so many student cards out there it can be overwhelming deciding which one to pick.
You should always choose a card that has no annual fee. Some cards that offer rewards and perks require a yearly fee. There are some exceptions, but most student credit cards don’t offer rewards. So a good student credit card will not have an annual fee.
You should pick a company that offers credit-monitoring tools. The main reason you are getting a card is to build up your score, so it would be crazy not to choose a company that allows you to monitor your credit score for free. A smart person would take advantage of this to track your progress and see areas of improvement for a better credit score.
You should choose a company that has no foreign transaction fees. Some credit cards charge a fee (usually 3% of the transaction) to use a card in a foreign country. They always say college is the best time to travel, so if you plan to study abroad or backpack across Europe, this is a big one.
You should choose a company that offers incentives. A lot of cards will pay you cash for having good grades. Some may even reward a higher credit line once you’ve made several payments on time, which will increase your credit score drastically.
A few commonly chosen student cards are Discover it for Students, Citi ThankYou Preferred Card for College Students and Journey Student Rewards from Capital One.
If the thought of getting a credit card scares you, then there are alternatives. You can become an authorized user on a parent’s card. You will get the benefits of your parents' credit history, but you aren’t legally liable for paying the bill.
You could also get a secured credit card which allows you to make a security deposit that becomes your line of credit. After you have earned the trust of the company, the card issuer may upgrade you to an unsecured card and return your deposit.
Whether you apply for a student credit card or go another route, building a credit score now can set you up for a stable financial life. Building your credit in college can teach you so much about the world of money before you actually get thrown into it in a few years.
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