Getting a credit card

Guiding Your Child's First Credit Card Experience with a Discover Student Credit Card contents
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A mother helps her college aged daughter apply for a credit card.

Guiding Your Child's First Credit Card Experience with a Discover Student Credit Card

11 min read
Published October 4, 2024
Getting a credit card

Table of contents

Key Takeaways

  1. It’s a good idea to learn the basic terminology of credit cards before applying for a student credit card.

  2. A budget is a useful tool to keep credit spending manageable.

  3. Use available tools to help monitor spending and keep track of payment due dates.

If you’re here, you likely want to give your child the best opportunity for a good financial future. It’s never too early or too late to educate your kids about credit and talk about finances. What you teach them now about how to build credit will last them a lifetime.

Understanding credit basics

When you begin to learn about credit cards and credit history, it’s good to know some of the basic terminology. Learn these terms first, then dive into more on how these terms will help your child’s new credit card experience.

A budget is a spending plan that accounts for income, expenses, and financial goals.

Your credit limit is the maximum amount you’re allowed to borrow.

A credit card is a short-term loan of revolving credit. Revolving credit means you have ongoing access to the line of credit (credit limit) as you continue to pay off the borrowed amount.

A credit card for students works for those with no credit or a short credit history. Student credit cards may have a lower credit limit, so students can practice responsible use and build a credit history.

Secured credit cards require a refundable cash deposit. You can get your deposit back when the account closes with no balance or if you proceed to an unsecured card after several on-time payments. With a Discover it® Secured Credit Card, your credit line will equal your deposit amount, starting at $200.1

Your credit history is a summary of how you manage your credit accounts and debts. Lenders use your credit history to determine your credit risk.

A credit report details your credit history. This includes activities like personal loan payments and the status of your credit accounts. Your lender might report your activity to more than one credit bureau.

A credit score is a three-digit number that helps predict your future credit performance. Your credit score uses your past activity to determine how likely you are to pay your debt on time.

Your credit card payment due date is the day that you must pay at least the creditor’s minimum amount (based on your overall balance). It’s based on the closing date of your last billing cycle. The due date is at least 21 days after the closing date (when the credit card statement was generated).

Your minimum payment is the lowest amount you must pay toward your credit card statement balance.

Making a payment after the payment due date can come with certain consequences. A late payment can include late fees, interest accrued on the credit card balance, and potential negative impacts to your credit score.

Your APR refers to the yearly interest rate your credit card issuer charges you for carrying a balance on your card. There are different types of APRs for credit cards, including an intro APR, a penalty APR, and a standard purchase APR.

Cash back rewards cards allow you to earn rewards on purchases you will make anyway. If you have the right card, your cash back rewards can really stack up, whether purchasing big-ticket items like electronics or smaller items like gas and groceries.

Practical financial lessons

Before getting any kind of credit for your student, an important first step is to create a budget. A good budget could help your child avoid overwhelming credit card debt. Your student should understand how much money they have after they subtract their expenses (rent, phone bill, groceries, gas) from their income (internships, part-time jobs, allowances). The money left over is their disposable income.

Once your child knows how much disposable income they have, it’s time to look at their financial goals. Some goals may include investing, saving, buying a car, or traveling during spring break.

The last step is to decide how they will use their new student credit card. Many students use their credit card to keep track of their regular spending on things like gas, groceries, clothing, and eating out.

 

Once you and your child have figured out a budget, there’s another important conversation: defining wants vs. needs. A “need” is immediate and necessary. You can save for a “want” (even when using a credit card) or avoid it overall.

Did you know?

The Discover student credit card helps you build your credit history.2 Compare student credit cards to find the one most suited for your spending needs.

Learn More

Choosing the right credit card

There are a few options for student credit cards. How do you choose the best credit card for you or your child? Decide what’s most important and look for cards that match those goals.

No annual fee: Annual fees are yearly fees charged by credit card companies to use certain credit cards and access their benefits. According to Experian®, you can expect to pay anywhere from $50 to over $500 per year for a card with an annual fee, though the card issuer may waive the fee your first year. Discover has no annual fee on any of our cards.

Easy application process: Ideally, it should take a few minutes to apply for a student card. You can apply online or through the mail from a credit card offer. Discover offers a step-by-step guide to completing your student card application.

Educational resources: It’s beneficial to have a credit company that wants you to succeed at managing your card. That’s why Discover® Card created Card Smarts. You’ll be ahead of the game when you read topics on getting a credit card, using your credit card, and credit card rewards.

Purchase rewards programs: It’s good to see the types of rewards your child can get so they can use their student credit card for maximum benefit. A rewards student credit card, such as Discover it® Student Cash Back Card or Discover it® Chrome for Students, can help you earn cash back on everyday purchases.

Why a student credit card?

A good student credit card can help your child in several ways:

  • Learn how to manage finances
  • Establish and build a credit history
  • Learn how credit scores work
  • Receive low introductory interest rates
  • Access financial education resources

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With no harm to your credit score4

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Why Discover® student credit cards?

As you learn more about how student credit cards work, you might have a few questions. Top of mind could be, “Is a Discover® student credit card good?”

Before you even apply, Discover offers several benefits. We’ve already mentioned the great resources in the Card Smarts articles that can answer your questions about getting, using, and managing your credit. Second, is that Discover offers a pre-approval form so you can check to see if you’re pre-approved with no harm to your credit score.4

Once approved, your child will have access to multiple Discover benefits and security features. First, Discover® Card has a $0 Fraud Liability Guarantee. You’re never responsible for unauthorized purchases on your Discover Card.5

When your student has a credit card question, they can count on 100% U.S.-based customer service by phone or messenger app with Discover® Card.6

As they learn to navigate their credit, several Discover® Card features will come in handy. Cardmembers can get a free Credit Scorecard with your FICO® Score and important information behind it, like credit utilization, number of missed payments, number of recent inquiries, length of credit history and total number of accounts.7

Students can also track their spending with the spend analyzer tool to see total monthly spending broken down by category.

Helping your child apply for a Discover® student card

It’s a great idea to pull together the required information before your child begins their application. Having information at your fingertips will help you quickly fill out an application.

You’ll need the same information whether you fill out your application online, through the mail, or over the phone:

All this information is required to apply for a Discover® student credit card. Once you’ve gathered everything, you’re ready to fill out an application.

Building your child’s credit with Discover Student card

Just like college, a student credit card can be a great education on building credit. The more they understand now, the more apt they are to have a strong financial future.

Monitoring and managing spending

One of the first things your student should learn is to not spend more than they earn in a month. While they can make a minimum payment on their statement balance, it’s ideal to pay off their balance each month to avoid interest on their purchases.

For a convenient way to check their balance on the go, download the card issuer's mobile banking app. Like their online portal, your mobile app should provide real-time information about your balance and other account activity.

Mobile apps may offer a range of features to help you manage your credit card—including alerts like when you reach a certain balance or that your bill is due soon. User-friendly tools like alerts and notifications can help you develop healthy financial habits, especially for your first credit card.

To keep track of spending, Discover® Cardmembers can use the Discover Mobile app which has several budgeting features. One such feature is the spend analyzer tool. The spend analyzer tool lets your student see their total monthly spending, broken down by category.

The Discover mobile banking app makes it easy to check a credit card balance. You can also make payments, manage your rewards, and more.

 

Discover® Cardmembers can sign up for credit card alerts to keep track of their minimum payment due date. They can also set up alerts or reminders to track their spending.

Importance of timely payments

On-time monthly payments are a crucial component of credit scores. When a credit card issuer reports a late payment to the credit bureaus, it can harm your student’s overall score. Credit card issuers, banks, and other lenders use a credit score to determine creditworthiness. A good credit score can help your student in the future when they want to apply for a personal loan or additional credit cards.

 

Additionally, when your child is late on a credit card payment (or misses one altogether), it can mean trouble for their budget. Consequences can include late fees and penalty APR interest on the credit card balance.

To avoid missing a payment, Discover® Cardmembers can set up alerts that help stay on top of activities such as payments, spending, and fraud. Text APP to 20877 to download the Discover Mobile app on your phone.

Another solution to avoid late payments is to set up automatic bill pay to pay a specific amount from their bank account or debit card towards their credit card statement every month.

Addressing missteps

As your child learns how to manage a new student credit card there are a few steps you can take to help them avoid common credit pitfalls.

 

Take time each month or so to review a few things with your child, like their budget vs. actual spending. Be sure to make any adjustments to their budget as needed.

  • Have they come close to their credit limit?
  • Are they spending only where budgeted?
  • Can they make more than a minimum credit card payment?
  • Have they redeemed their earned rewards?

 

Ask how the notifications and autopayments help their card management. You might find they need to add more (or less) layers of protection.

Preparing for independence

As your child becomes more comfortable and consistent with their budget and spending, it’s time to transition them to managing their finances on their own. Gradually shift responsibilities to your student, but always let them know you’re there to help when needed.

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  1. Secured Card Deposit Range: If approved, you must make a minimum security deposit of $200 (or more, in increments of $100 up to $2,500), which will equal your requested credit limit. Discover will determine your maximum credit limit by your income and ability to pay.

  2. Build credit with responsible use (Student): Discover reports your credit history to the three major credit bureaus so it can help build your credit if used responsibly. Late payments, delinquencies or other derogatory activity with your credit card accounts and loans may adversely impact your ability to build credit.

  3. No Credit Score Required to Apply (Student): Based on the preceding 12 months of Discover Student credit card application data, applicants without a credit score may qualify. You must meet other applicable underwriting criteria. When we evaluate your creditworthiness, we consider all the information you provide on your application, your credit report, and other information. If you have a credit score, we may use that in our evaluation. Not having a credit record may impact your approval odds.

  4. There is no hard inquiry to your credit report to check if you’re pre-approved. If you’re pre-approved, and you move forward with submitting an application for the credit card, it will result in a hard inquiry which may impact your credit score. Receiving a pre-approval offer does not guarantee approval. Applicants applying without a social security number are not eligible to receive pre-approval offers. Card applicants cannot be pre-approved for the NHL Discover Card.

  5. $0 Fraud Liability: An “unauthorized purchase” is a purchase where you have not given access to your card information to another person or a merchant for one-time or repeated charges. Please use reasonable care to protect your card and do not share it with employees, relatives, or friends. Learn more at Discover.com/fraudFAQ.

  6. Real human customer service 24/7: You can reach a live agent any time by calling 1-800-Discover (1-800-347-2683). Certain specialized customer service agents may not be available 24/7.

  7. FICO® Credit Score Terms: Your FICO® Credit Score, key factors and other credit information are based on data from TransUnion® and may be different from other credit scores and other credit information provided by different bureaus. This information is intended for and only provided to Primary account holders who have an available score. See Discover.com/FICO about the availability of your score. Your score, key factors and other credit information are available on Discover.com and cardmembers are also provided a score on statements. Customers will see up to a year of recent scores online. Discover and other lenders may use different inputs, such as FICO® Credit Scores, other credit scores and more information in credit decisions. This benefit may change or end in the future. FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.

    Capital One Financial Corporation and Fair Isaac are not credit repair organizations as defined under federal law or state law, including the Credit Repair Organizations Act. Capital One Financial Corporation and Fair Isaac do not provide “credit repair” services or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating.

  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover® product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

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