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What is a student credit card, and how do you pick one?

Yahoo Personal Finance· Getty Images
Updated 7 min read

The earlier you start building a positive credit history, the better off you'll be later in life. As a college student, you have a unique opportunity to do so: student credit cards. These cards are easier to qualify for than traditional credit cards, and they give you the chance to build credit and earn valuable rewards before you finish your degree.

There are many student credit cards on the market, so finding the right one can seem daunting. However, learning credit card basics and key terms can help you select the best card for your needs.

In this article:

Building credit from scratch can be challenging. In fact, nearly 50 million people are credit invisible, according to the Office of the Comptroller of the Currency, meaning they don't have enough credit history to have a credit file or credit score. Without a credit score, they're unable to qualify for traditional credit cards or loans, and they may even be denied for a new apartment lease or cell phone plan.

However, if you're one of the nearly 19 million students currently enrolled in college, you have the advantage of applying for a student credit card. These cards, designed specifically for college students, have less stringent eligibility requirements than other cards, making them easier to get if you have limited credit or no credit history at all.

To qualify for a student card, you typically must be enrolled with an accredited college on a full- or part-time basis, and you'll need either a co-signer or a source of income if you're under 21.

There are many student cards on the market, so it can be overwhelming figuring out which is the best student credit card for your needs. To narrow down your options, consider these major factors:

Ideally, you'll pay off your credit card balance in full every month; doing so will prevent interest from accruing. However, that approach isn't always possible, and your card's APR can affect how much interest builds over time.

The APR reflects the rate of interest you'll pay over the course of one year. The higher the APR, the more interest will accrue when you carry a balance.

Nationally, the average APR for cards that assessed interest was over 22% at the start of 2024, according to the Federal Reserve. However, rates vary by issuer and are also based on your individual application. As of May 2024, we found student credit cards with rates as low as 16%.

With some credit cards, there are monthly or annual fees you must pay, regardless of whether you use the credit card or not. For a first credit card or student credit card, consider starting with a basic option without any monthly or annual account fees.

For example, the SavorOne Rewards for Students card from Capital One has no annual fee, but comes with a useful rewards program that allows you to earn 3% cash back on common categories like dining, entertainment, popular streaming services, and at grocery stores.

Your credit limit is the maximum balance you can carry on the card at one time. Because student cards are designed for new credit users and are easier to qualify for, they often have lower credit limits than other cards. Some student credit cards have maximum limits as low as $500.

A higher maximum can be appealing since it gives you more upfront purchasing power, but be cautious: a higher credit limit could tempt you into overspending, leading you into credit card debt.

Student credit cards tend to be fairly basic, but there are options that allow you to earn rewards on your purchases. Depending on the card, you may earn points, cash back, or even airline miles on your purchases.

Look for a rewards credit card that matches your spending habits. For example, if you plan to study abroad, a card that rewards you for travel may be a good fit. Commuter students could benefit from a card that rewards spending at gas stations, while students without a campus meal plan might prioritize cash back on grocery purchases.

There are also cards that offer flat rewards on everything. If you don’t want to worry about strategizing your spending, consider a card like the Capital One Quicksilver Student Cash Rewards Card, which offers an unlimited 1.5% cash back on every purchase without charging an annual fee.

Some student cards offer new card member bonuses that allow you to earn extra rewards if you meet the card's promotional requirements.

The Discover it? Student Cash Back card, for example, offers an unlimited cash back match at the end of your first year. So if you earn $100 cash back over the first 12 months, Discover will automatically award you another $100 after your first cardmember anniversary.

Read our full review of the Discover it Student Cash Back card

With the best student credit cards, there's a specific pathway to traditional cards. If you use the card responsibly and establish good credit, some issuers will allow you to "graduate" to other cards — often with higher credit limits and more benefits — once you leave college.

Student credit cards are only available to those enrolled with a qualifying college or university. If you aren't eligible for a student credit card but have a limited credit history, there are a few other ways to build your credit:

  • Ask a parent or relative to co-sign a card application: If you don't meet the criteria for a traditional credit card on your own, you may be able to qualify for a card if you add a parent or relative with good credit to your application as a co-signer. The co-signer shares responsibility for the card balance and payments, so adding one makes it more likely that you'll be approved.

  • Get added as an authorized user: If you have a parent, relative, or trusted friend with good credit and an existing credit card, they can add you as an authorized user. As an authorized user, you'll benefit from their timely payments and responsible credit card use, without being legally responsible for charges made.

  • Apply for a secured credit card: Secured cards require a security deposit — such as $200 to $1,000 — which acts as your credit limit. As you make payments on time and use the card responsibly, a secured card helps you establish a positive credit history.

While student credit cards are certainly useful tools, they’re not right for everyone. Just as these cards can help you increase your credit score with proper usage, mismanaging your account can lead to serious financial consequences.

Student credit cards charge interest, and your credit activity in college can affect you long after you graduate. To maximize the benefits of a student credit card — and to minimize the risk of accruing debt — follow these best practices:

  • Create a budget: As a college student, creating a budget and tracking your spending is key to managing your money and improving your credit. Sticking to a budget will ensure you don't overspend or rack up unnecessary credit card debt.

  • Pay at least the minimum: Prioritize paying at least the minimum payment required every month. Doing so will establish a positive payment history and help you to build your credit.

  • Limit charges: Only use the card to pay for necessary purchases that you can afford to pay off in full each month. If you have to carry a balance from one statement period to another, that's a sign that your spending is getting out of hand, and you need to cut back.

This article was edited by Alicia Hahn

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