Benefits of Having a Student Card for College Students

College expenses extend far beyond just tuition fees and can encompass a wide array of necessities like textbooks, accommodation, groceries, and transportation. According to a 2023 College Board report, full-time undergraduate students at public two-year and four-year institutions, as well as private four-year universities, typically incur thousands of dollars in additional expenses beyond their basic tuition and fees.

For instance, consider a scenario where you’re a full-time undergraduate student at a public in-state college during the 2023-2024 academic year. On average, you would have spent approximately $12,770 for room and board, along with an additional $1,250 for books and supplies. The report also indicates an average expenditure of $1,290 for transportation and $2,270 for other miscellaneous expenses. Altogether, these costs amount to a total of $17,580. Keep in mind that if you’re attending a private university, these expenses may be slightly higher. It’s worth noting that individual expenses may vary from these averages, so calculating your student budget can provide more precise figures.

Certainly! While you could cover your college expenses with cash or a debit card, utilizing a student credit card offers the added advantage of earning rewards for your expenditures. These cards are essentially regular credit cards but tailored for students who are new to credit. Often, they come with no annual fees and feature benefits and rewards programs specifically designed for students. Moreover, their approval criteria are typically geared towards students with lower incomes and limited credit history.

When used responsibly, student credit cards can aid in establishing your credit history, which is crucial for achieving future financial milestones such as purchasing a car, renting your first apartment, or buying a home. So, if you anticipate spending a significant amount during your college years, leveraging a student credit card to earn rewards and bolster your credit profile can be a prudent move.

For example, recent college graduate Daniel Kelton utilized a student credit card to establish his credit when he found himself in need of a new car but lacked credit history. After leaving the military to pursue education, he opted for the Capital One Quicksilver Student Cash Rewards Credit Card and diligently utilized it for a year to build his credit before applying for a car loan.

“Over two years, my credit score has risen to the excellent credit score range,” Kelton shares. “The generous credit limit on the card has been particularly beneficial as it helped me maintain a low credit utilization. Now that I’ve established a credit history, I’m considering transitioning to a card with enhanced rewards.”

If you’re considering a student credit card, it’s essential to examine the perks and benefits before applying:

  1. Rewards structure and offerings
  2. Opportunities for credit building
  3. Student-specific advantages
  4. Welcome bonuses

Additionally, familiarizing yourself with how to select a student credit card empowers you to make an informed decision. We’ve evaluated the leading student credit cards available, and the top contenders typically offer these advantages:

When you embark on your journey with a student credit card, you often begin with limited or no credit history, resulting in a lower credit limit upon approval. However, many student credit cards come with automatic account reviews.

This entails the card issuer regularly assessing your account to ensure you’ve been making timely payments and exhibiting responsible credit card usage. If you meet these criteria, the issuer may opt to increase your credit limit. This was the case with Kelton’s student credit card.

“For me, the card’s value lay in its minimal restrictions despite my lack of credit history,” he explains. “It wasn’t a secured card, and it granted me a decent credit limit ($3,000) — essentially a fully-functional credit card attainable without significant credit history. I didn’t have poor credit; I simply lacked credit history. After maintaining good standing with the account for about a year, the issuer raised the limit to over $5,000.”

With an expanded credit limit, you can decrease your utilization ratio, thereby enhancing your credit score. This credit limit boost enabled Kelton to elevate his credit score and accomplish his objective of securing a loan for a new vehicle.

Student credit card issuers recognize that you’re still navigating the complexities of credit, so they often offer leniency when it comes to fees. It’s common for standard credit card fees like late fees and annual fees to be minimal or even waived entirely on student credit cards. For example, you might incur no fee for your initial late payment, with the full late fee applied only on subsequent occurrences.

Moreover, many student cards refrain from imposing foreign transaction fees, making them ideal companions for a study abroad semester or an unforgettable Spring Break getaway.

Student spending habits often differ from those of more seasoned credit card users, which is why student cards typically feature rewards programs tailored to college students. These programs often offer cash back on common purchases like streaming services, groceries, gas, or dining out. Cash back rewards are particularly popular because they provide students with much-needed extra funds.

Kelton’s experience highlights the potential rewards of using a student credit card wisely while also building credit. “I’ve earned over $400 in cash back,” he shares. “I started using the card for all my grocery and gas purchases, and I made sure to pay off the balance in full each month to avoid accruing interest charges.” By responsibly managing his card and paying off the balance promptly, Kelton was able to benefit directly from the rewards program.

Welcome bonuses, also referred to as sign-up bonuses, are a common feature of student credit cards. These bonuses often consist of cash, points, or a statement credit, which you receive after meeting specific spending criteria. Securing a welcome bonus can provide an immediate boost to your rewards, allowing you to use them for various purposes such as purchasing school supplies, covering dorm essentials, or bolstering your savings.

When making purchases online or in physical stores, there’s a risk of scammers accessing your card details and making unauthorized transactions. However, federal law limits your liability to $50 if your credit card information is compromised and used for fraudulent purchases. Additionally, most credit cards offer zero liability protection, provided you report the fraudulent activity within 60 days. Unlike credit cards, debit cards and cash do not offer the same level of protection against fraudulent transactions.

As a student credit cardholder, maintaining a vigilant eye on your credit profile is crucial. The responsible credit behaviors you cultivate now can pay dividends in the future, making any tool that facilitates this endeavor invaluable.

Take, for instance, Capital One’s range of student cards, which provide access to CreditWise. This service aids in monitoring your credit profile and safeguarding against identity theft, offering features like alerts for changes in Experian and TransUnion credit reports, dark web monitoring, and tracking of Social Security numbers.

Student credit cards offer a plethora of benefits and perks that could streamline your campus life. However, failing to use your student card responsibly can swiftly offset these advantages. Prioritizing the cultivation of healthy credit habits over maximizing rewards is paramount, as accrued interest charges can erode any rewards earned.

In essence, leveraging your student credit card can bolster your credit-building endeavors and propel you toward achieving other financial milestones. Once you adeptly navigate these principles with your student credit card, you can extend your proficient credit management skills to other facets of your financial journey.