What is a student credit card?

If you’re a college student, you probably have a lot on your schedule — classwork, extracurriculars, part-time jobs and more. You probably haven’t thought about whether you need to add “build good credit score” to your to-do list, but taking the time to build a positive credit history now can save you a lot of trouble — not to mention a lot of money — later on.

For many college students, your first experience with credit will come in the form of a student credit card. These starter cards can help you make purchases, cover expenses, earn rewards and boost your credit score — but only if you know how to use credit wisely.

Luckily, we’re here to help. If you have questions about student credit cards, credit-building and how to set yourself up for a strong financial future, consider this a crash course in how to use credit.

What is a student credit card?

A student credit card is a line of credit specifically designed to meet the needs of today’s college students. The best student credit cards help college students build a positive credit history while allowing them to take advantage of popular credit card benefits like cash back rewards. A few student credit cards even offer rewards for good grades.

That said, the real benefit of a student credit card is the opportunity to establish good credit at a young age. Since building good credit is one of the most important financial moves you can make, the sooner you get started the better.

Minimum age and income for student cards

The Credit Card Act of 2009 effectively banned credit card issuers from issuing cards to people under 21, making it much more difficult for students to get them.

If you are under 21, the only way you can be approved for a credit card is if you have a co-signer who is willing to take on legal responsibility for any charges made to the card — or if you can prove that you have enough income to pay off your debts.

Very few issuers allow co-signers, but you can become an authorized user on someone else’s credit card — even if you’re still a minor. You won’t have a line of credit of your own, but you’ll be able to team up with a parent or guardian and use their credit card to make purchases and start building your credit history.

Benefits of getting a student credit card

Among the many reasons to join the card-carrying adults in your life, here are the most important:

You’ll have an emergency fallback

You’ve probably found yourself in situations when you needed to pay for something on the spot — whether it was concert tickets, plane fare or the mechanic who fixed your car — and you didn’t have the cash to cover it. While relying too much on credit can get you into trouble, having a fallback plan in the form of plastic can make life easier, as long as you have a plan to pay it off.

You can build credit

Your three-digit credit score plays a huge role in your financial life. Whether you’re applying for a credit card or an apartment, signing up for a new phone plan or taking out your first car loan, having good credit will give you a much better experience, which is why it’s a good idea to start building it as early as possible.

People with good credit, which includes any FICO credit score of 670 or above, are more likely to be approved for credit cards, loans and mortgages. Those with higher credit scores also tend to be offered lower interest rates, which can save you a lot of money over time. There are even some additional benefits associated with having good credit — in some cases, for example, your credit history might affect whether you get hired for a job.

Score some rewards

While you build that all-important credit, you can be earning rewards on your spending — without paying an annual fee. Two examples include:

With the Discover it® Student Cash Back card, you can earn 5 percent on different categories that change every three months — including Amazon.com, grocery stores, restaurants and gas stations — and 1 percent on everything else.

The Capital One SavorOne Student Cash Rewards Credit Card gives you unlimited 5 percent cash back on hotel and rental car bookings through Capital One Travel; 3 percent cash back on dining, entertainment, popular streaming services and grocery store purchases; 8 percent on Capital One Entertainment purchases; and 1 percent on everything else.

What to avoid with student credit cards

A primary risk of using credit cards is that they make it easy for you to spend — and then get behind on payments. Late payments bring late fees — which add up fast and damage your credit score.

Avoid purchases you can’t afford to pay off. While some people choose to carry revolving balances on their credit cards, it’s better to get into the habit of paying off your statement balance in full every month.

Why? Because 30 percent of your FICO credit score is based on credit utilization, which is the ratio of your current debts to your total available credit. Paying off your balance every month is a great way to keep your credit score high.

Because students represent a higher risk, student credit cards tend to have higher-than-normal interest rates (APR). If you always pay off your statement balance before your grace period expires, you won’t have to pay interest on your purchases.

What to do if you don’t qualify for a student credit card

If you’re not eligible for a student credit card, don’t worry. There are still plenty of ways for you to build a positive credit history and access the benefits that a credit card can offer. Here are some options to consider:

Become an authorized user

One of the best ways to build credit is by teaming up with someone who already has good credit. Many college students can benefit from becoming an authorized user on one of their parents’ credit cards, which allows them to piggyback on their responsible credit habits and begin building positive credit histories of their own.

As an authorized user, you’ll be able to make purchases, but your parents will be responsible for making on-time payments on the card. It’s always a good idea to pay them back for any purchases you make — then watch the shared credit activity become part of your credit history.

Find a co-signer

In some cases, you may be able to access a line of credit by getting a parent or guardian to co-sign a credit card. When a person co-signs a credit card on your behalf, they are essentially promising to serve as backup. If you miss credit card payments or rack up balances you can’t pay off, your co-signer — who is legally liable for any charges made to the card — may be asked to step up and pay off the debts.

Only a few credit card issuers allow co-signing, so keep that in mind as you consider your options.

Apply for a secured card

Some college students who don’t qualify for a standard credit card may be able to improve their qualifications by applying for a secured credit card. When you get a secured credit card, you put down a small security deposit — often around $200 or so — in exchange for access to a small line of credit.

To build your credit history, use your secured credit card to make a few minor purchases every month. Then pay those purchases off, on time and in full, every time your bill is due. If you use your secured credit card responsibly, your credit card issuer may refund your security deposit and graduate you to a standard (unsecured) credit card.

Add your rent and utility payments to your credit history

There’s one more way for college students to improve their credit histories and boost their credit scores — and that’s by reporting their rent and utility payments to the credit bureaus. Services like Experian Boost, which allow you to include bill payments on your Experian credit report, are some of the best ways to build credit without a credit card.

Bottom line

If you’re a college student learning how to use credit for the first time, practicing these kinds of smart credit moves can lead to a better credit card before you know it — and, more importantly, an excellent financial future.