How Do Student Credit Cards Work?

Student credit cards tend to come with lower credit limits than regular credit cards, but they let you build your credit history.

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Student credit cards are typically meant for students who are over 18 years of age, although until you turn 21, getting one comes with an additional requirement (you need to show that you earn adequate independent income or have a cosigner). You might consider getting a student credit card if you wish to start building your credit history, if you need short-term financial assistance or if you want to safeguard your spending when overseas.

You can use a student credit card to make all types of legitimate purchases. However, it’s best that you pay them off as quickly as possible to keep your interest charges to a minimum. When compared to regular credit cards, alternatives for students tend to come with more relaxed creditworthiness requirements.

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Article Highlights

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Student credit cards give you the means to build your credit history.

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Some student credit cards let you earn rewards or cash back.

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If you do not qualify for a student credit card, consider a secured credit card.

What Is a Student Credit Card?

A student credit card can function as a great financial tool, provided you use it properly. Typically meant for students enrolled in colleges, student credit cards give you the means to start building your credit history early in life. This, in turn, affects your ability to get any type of credit in the future.

Student credit card providers understand that most applicants have little to no credit history, which is why they don’t rely on this aspect to make decisions as much as they do with regular cards.

Depending on the student credit card you get, you might be able to earn rewards or cash back. What also helps is that most student credit cards come with no annual fees.

What Are the Qualifications for a Student Credit Card?

Eligibility criteria for student credit cards vary from those of regular cards, and here’s what you need to know:

  • Requirements
  • Age
    Student credit cards are made available to those who are over 18 years of age. However, if you are below 21, you need to meet additional requirements.
  • Income
    If you've not turned 21 yet, you need to show that you have independent income or get an adult cosigner. Once you turn 21, you can include any type of income in your application. This can come from freelance work, part-time work, money you regularly receive from a parent and even the income of your spouse/partner to which you have access.
  • Enrollment Status
    Most student credit card providers require that you be enrolled in a college when you apply. You may qualify if you’re a full-time or part-time student at a university, graduate school, community college or trade school.
  • Residency Status
    International students have limited options because most student credit card providers require U.S. Social Security numbers during the application process. Some credit cards that international students may apply for include the Deserve® EDU Mastercard for Students, the Capital One Journey Student Credit Card and the Bank of America® Travel Rewards credit card for Students.

Key Differences Between Student and Regular Credit Cards

One of the main differences between student credit cards and regular credit cards is the eligibility criteria. Unlike most good regular credit cards, student credit cards don’t focus much on applicants’ credit scores. Given the changes in credit card requirements that came about because of the Credit CARD Act of 2009, students under 21 years of age need to show that they have independent income or get cosigners for their applications.

Since student credit card providers don’t have your existing creditworthiness to go by in making their decisions, you can expect your card to come with a lower credit limit and a higher APR than that of a regular card. The rewards or cash back you stand to earn might also be lower than what you can expect through a regular card.

Types of Credit Cards Available for Students

There are different types of credit cards available for students, and some of them are meant to serve specific purposes. For instance, while some let you earn rewards, others charge no foreign transaction fees.

  • Type of Cards
  • General Student Cards
    You can use a general student credit card for everyday spending and to build your credit. Depending on the card you get, you might benefit from no foreign transaction fees, a conditional sign-up bonus and fraud liability.
  • Student Rewards Cards
    Student rewards cards function in the same way as general student cards, although they give you the ability to earn rewards or cash back. However, you stand to earn no more than 1% cash back or 1x reward points per dollar spent with most student rewards cards. The Journey Student Rewards from Capital One Card is one of a few exceptions, as it lets you earn 0.25% extra cash back if you pay your bills on time.
  • Secured Credit Cards
    If you’re unable to qualify for a student credit card because of its income requirement or the absence of a cosigner, you may want to consider getting a secured credit card. In this case, you need to pay a deposit, which then acts as your credit line. Since secured credit cards report payment histories to credit bureaus, you can use one to start building your credit.
  • Prepaid Cards
    While you need to pay a deposit to get a prepaid card, it does not qualify as a credit card. This is because you do not make repayments toward a prepaid card — you simply load it and use the money. While some prepaid cards let you reload money, they still don’t report your payments to credit bureaus. As a result, getting a prepaid card will not help you in building your credit history.

How to Choose a Student Credit Card

Ask yourself these questions to determine which type of student credit card might work best for you:

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Compare multiple student cards before selecting one. You can also use our ranking methodology, through which we’ve analyzed 80 student cards, to your advantage.

How Do Student Credit Cards Help Build Credit History?

Using a student credit card properly gives you the means to build your credit history. This is because student credit card providers report payment histories to credit bureaus such as TransUnion, Experian and Equifax.

To build your credit score using a student credit card, you need to make all your payments on time and keep your credit utilization ratio low. The credit utilization ratio refers to the amount of credit you’ve used when compared to the total amount of credit available to you. For instance, if you’ve borrowed $200 from your only credit card that comes with a credit limit of $500, your credit utilization ratio is 40%. From the creditworthiness point of view, it’s ideal to keep your credit utilization ratio below 30%.

The average age of your credit accounts plays a role in your credit score as well, so the older your student credit card account, the better for your creditworthiness.

If you handle your credit card debt in the right manner, you may expect to see positive signs in your credit reports within 6 to 12 months.

How Can Credit Cards Negatively Impact Credit and Finances?

When you make a late payment or miss making a payment toward your student credit card, you may expect the card’s issuer to report the same to credit bureaus. Every such instance has a negative effect on your credit score. Besides, you will be likely to pay late fees as well.

Applying for multiple student credit cards or other types of credit in quick succession may bring down your credit score. You should ideally space your applications for credit by at least six months.

Having a high credit utilization ratio also has an adverse impact on your credit. Besides affecting your credit score, high outstanding balances will also require that you pay more as interest charges.

How Can Student Credit Cards Be Used?

Student credit cards can serve different purposes, based on what you’re after. Here are some examples of how you can use student credit cards to good effect:

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    Buying groceries and books

    Using a student credit card to pay for groceries, books and other everyday purchases might work well, as these purchases are typically low in value and easy to pay off. By doing this, you get to build your credit history. Depending on the card you get, you might also be able to earn cash back on your grocery spending.

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    Earning rewards

    Cards such as the Chase Freedom® Student credit Card, the Deserve® EDU Mastercard for Students and the Journey Student Rewards from Capital One Card let you earn cash back on all your purchases. The Cash Rewards Credit Card for Students from Bank of America offers 3% cash back on any one of six categories you choose, 2% at grocery stores and wholesale clubs and 1% on all other purchases.

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    Spending overseas

    Whether you’re traveling overseas to study or for any other reason, you may use your student credit card to pay for your expenses. This can lead to savings if you use a card with no foreign transaction fees. You also get protection in case your card is lost, stolen or fraudulently used.

How Student Credit Cards Should Not Be Used

While student credit cards give you access to extra money easily, it is imperative that you do not use your card in a manner that affects you adversely.

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    If you end up using more than 30% of your total available credit, you can expect it to reflect poorly on your credit reports. In addition, using up to 30% of your credit limit makes sense only when you know you can pay off the debt in a timely manner.

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    Big-ticket purchases

    Using your credit card to take a vacation or buy an expensive gadget might not work well unless you plan to pay the balance off quickly. If you don't, you might have to pay a tidy sum as interest.

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    Cash advances

    Unlike purchases that come with interest-free days, cash advances start accruing interest from the day of the transaction. Cash advances tend to come with noticeably higher APRs than purchases. As a result, you should only use a student credit card for a cash advance in an absolute emergency.

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    Retail therapy

    If you are feeling under the weather and think that retail therapy might help lift the blues, don’t turn to your student credit card unless you know you can pay it off quickly.

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Students can increase their potential to earn reward points by offering to make payments when they’re out with friends and then using payment or bill-splitting apps such as Venmo, Cash App, Google Pay or Splitwise to request the money they’re owed. This way, you get to earn extra points while also being able to pay off your card’s balance by the end of its billing period.

Alternatives to Building Credit Without a Student Credit Card

  • Alternatives
  • Secured credit cards
    If you are unable to qualify for a student credit card, either due to lack of income or because of not being able to get a cosigner, you might want to consider getting a secured credit card. In this case, you need to pay a security deposit. Minimum and maximum deposit amounts vary from one card to another. The security deposit you pay becomes your credit line.
  • Authorized users
    Becoming an authorized user on someone’s existing credit card is an option, and you are not liable to repay the debt. How well the primary cardholder uses his/her card reflects on your credit history, for better or worse.
  • Student loan
    Payments made toward your student loan while you’re still in college show as on-time payments in your credit file, which has a positive effect on your credit score.
  • Credit-builder loan
    With a credit builder loan, you need to make monthly payments that typically go into a bank account. The lender reports these payments to credit bureaus. Once you pay the entire amount, the lender disburses the loan to you.
  • Rental payments
    Find out if your existing landlord or property management company reports your rent payments to credit bureaus. If not, consider signing up with a service that reports your rental payments. Some of the rental payment service providers that report payments to Experian include RentTrack, PayLease and PayYourRent.
  • Experian Boost
    Experian Boost is a free service that lets you improve your credit score by getting credit for payments you make toward utilities, your phone and popular online streaming services such as Netflix, Disney+ and HBO.
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"If you can’t get a student credit card, the simplest way to build your credit is being added to a credit card account, even if they don’t give you the physical card to spend. As long as they pay their bills on time, you will get credit for their good financial habits." — Brett Holzhauer, Credit Card Journalist

Other Questions You May Have About Student Credit Cards

Here are answers to other commonly asked questions about how student credit cards work.

Next Steps

Now that you know how student credit cards work, look for alternatives based on your specific requirements. When comparing your options, pay close attention to aspects such as APR, fees, rewards and additional features.

Compare & Review Credit Cards

MoneyGeek experts use data provided by the Bureau of Labor Statistics (BLS) to evaluate student spending trends across the U.S. They have gone through details of 80 student cards to date so that you can look for suitable alternatives with ease.

Learn More About Student Credit Cards

The MoneyGeek editorial team makes ongoing research a top priority, as this helps the team answer all your questions quickly and efficiently. Whether you need information about how to get a credit card without having a credit history or how to build credit without a credit card, you can rely on them to guide you in the right direction.

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About the Author

Rajiv Baniwal headshot

Rajiv Baniwal has been writing about different financial topics for over 15 years. Meticulous in his research, he makes sure he provides accurate and up-to-date information. His areas of expertise include mortgages, personal loans, credit cards, insurance and international money transfers.

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