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Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: SDI Productions/Getty Images June 03, 2022 This article was generated using automation technology and thoroughly edited and fact-checked by an editor on our editorial staff. Liz Bingler is an Associate Editor for CreditCards.com and Bankrate, where she focuses on product news and reviews. As an editor, her goal is to produce content that will help people to make informed financial decisions. Bankrate logo The Bankrate promise
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Help you to build credit history
Student credit cards are designed to help you and credit score. Building credit history is important when you’re looking to get approved for a better credit card, a mortgage, an auto loan or another type of loan. However, you can only benefit from the positive effects of a student credit card if you . That means paying your credit card bill in full and on time each month and keeping your credit utilization ratio low. If you can responsibly use your student credit card, you’ll be in a good place when you’re ready to make a major purchase (like a home or a car) or take out a loan in the future. Teach you how to manage money
Another benefit of a student credit card is that it can teach you how to manage money and use credit responsibly. With a student credit card, you can learn the value of paying your balance in full every month, keeping your credit utilization ratio low and making sure you never spend more than you can afford to pay back. One of the most important ways to improve your credit score is to keep your credit utilization ratio low. A is the total amount of your charges divided by your available credit limit. For instance, if your credit limit is $500 and you have a balance of $100, your credit utilization ratio would be 20 percent. That’s lower than the recommended credit utilization ratio of 30 percent, which is good. is often considered risky to lenders. If you want to maintain a good FICO score, make sure you’re paying off your credit card balance in full every month and keeping your credit utilization rate low. Help you during an emergency
As a student, you might have a few unexpected expenses that come up while you’re in school. You might have a big utility bill due when you’re short on cash, you might have to spend a few hundred dollars on textbooks you forgot about or you might have a medical problem while traveling abroad. As long as you strive to pay your credit card bill off in full at the end of each month, your student credit card can help you out in an emergency. Just keep in mind that if you have a habit of running up a balance and carrying a balance month after month, your credit score will be negatively impacted. Offer some rewards and benefits
Just because you’re in college doesn’t mean that you don’t deserve to enjoy the . In fact, many student credit cards come with their own set of rewards and benefits that you can use to your advantage. One of the most valuable benefits of a student credit card is a rewards program. A credit card rewards program allows you to earn more points or cash back in popular purchase categories like dining, travel, grocery stores and entertainment. In addition to rewards programs, many student credit cards offer benefits like no annual fees, welcome offers, a 0 percent intro APR offer on purchases or balance transfers, no foreign transaction fees and fraud and purchase protection, among others. Cons of student credit cards
Lower credit limit
As a student, it may be difficult to get a credit card with a high limit. That’s not to say that there aren’t student credit cards with higher credit limits — there are. However, those tend to be for people who have a better credit history and a . If you have a low credit score or , you may need to start with a student card that has a lower credit limit. Although building your credit history is a gradual process, if you use your student credit card responsibly, you could qualify for a higher credit limit in as little as six months with some cards. High interest rates
On average, student credit cards have higher interest rates than regular credit cards. If your interest rate falls on the higher side, you could be hit with an APR of 27 percent or more. Still, student cards with low interest rates do exist. If you choose the right student card, you could have a low interest rate ranging from around 13 percent to 20 percent. Other student cards may include a 0 percent intro APR on purchases and balance transfers for a select period of time. However, you can avoid paying high interest by paying off your balance in full and on time for each billing cycle. Responsible use is critical
It’s also important to use your student credit card responsibly. While some students use their cards to pay for basic necessities or emergencies, maxing out your credit limit or failing to make payments in a timely manner can lead to high interest costs, late fees, a negative impact to your credit score and more. If you want to maintain good credit and make your student credit card work for you, make sure you handle your finances responsibly. Fewer perks than a regular credit card
Student credit cards are valuable for building credit, but there’s a general consensus that you’ll get more out of a regular credit card. With a student card, you’re more likely to miss out on features that may offer, such as higher rewards rates, lucrative sign-up bonuses and travel perks. With a student credit card, you’ll be able to grow your credit history, gain experience with credit card management and build up your credit score. Once your credit score is in good shape, you can look for a regular rewards credit card that will earn more rewards and offer more perks. The bottom line
Before you apply for one of the , it’s important to consider how a student credit card will . While a student credit card can be a helpful tool to build your credit history and score, it also can be a good way to spend money you don’t have — and suffer the consequences. Make sure you can pay off your balances on time and in full and you’ll be on your way to a strong financial future. SHARE: This article was generated using automation technology and thoroughly edited and fact-checked by an editor on our editorial staff. Liz Bingler is an Associate Editor for CreditCards.com and Bankrate, where she focuses on product news and reviews. As an editor, her goal is to produce content that will help people to make informed financial decisions. Related Articles