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What are the Benefits of a Student Credit Card?

Last Updated: June 27, 2024

12 min read

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Key points about: student credit card benefits

Student credit cards can help students build a credit history.
Some student credit cards offer cash back, or other rewards.
Student cards may offer perks, like no annual fee, or no foreign transaction fees.

A student credit card is not just any card; it's your first step toward managing your own finances. Tailored for students just stepping into the realm of credit, these cards are designed to be both a learning tool and a financial resource. With a student credit card, you begin the journey to financial independence by making purchases, paying bills, and understanding how credit works in real life.

Student credit cards come with several key benefits, all aimed at crafting a responsible spender and saver out of you. These benefits include access to financial education resources through various platforms, and alerts and reminders to help you stay on top of payments. Reward yourself with cash back or other perks tailored for students, turning everyday spending into savings or rewards. While these cards typically offer initial credit limits designed to match a student's budget and spending habits, your active engagement and responsible use are crucial. It's how you start building a solid credit history.

Here’s what students, parents, and recent graduates might want to know when considering student credit cards:

What is a student credit card?

A student credit card is a type of credit card designed for college students who are just starting to build their credit. These cards often come with no annual fee and provide benefits and perks like rewards programs, which can make them an ideal choice for stepping into financial independence.

Can a college student get a credit card?

Yes, college students can get credit cards. If you're at least 18 years old and can show that you have some form of income or assets, you might be eligible. Credit card issuers will also check if you're enrolled in college, either full or part-time, to determine if you qualify for a student credit card. Meeting these criteria helps issuers ensure that you can manage a credit card responsibly.

Student credit card benefits

There are a few different benefits of student credit cards that could be good for your financial future.

Student cards could help you build a credit history

Starting to build your credit history while in college can seem daunting, but it’s actually a smart move that pays off. A student credit card can be your ally in this journey. It’s designed just for students like you, who might be managing finances on their own for the first time.

Here’s why it’s a good idea:

Easy to Start: Even with little to no credit history, you may be eligible for a student credit card. It’s a first step towards showing lenders that you’re good at managing money.
Learn as You Go: Using a student credit card for daily expenses and paying off your balance regularly teaches you financial responsibility. Plus, it’s a practical way to learn about interest rates, minimum payments, and budgeting.
Build Your Score: Every time you make a payment on time, you’re building a positive credit history. Good credit is key for future financial milestones, like getting a loan with lower interest rates or renting your dream apartment.
Simple Habits, Big Impact: Small, consistent actions with your student card can lead to a solid credit score. Just paying the minimum each month, ideally more, avoids late fees and keeps your credit in good shape.

Remember, a student credit card isn't just for purchases; it's a tool for building a strong financial foundation. Start using one wisely now, and you'll set yourself up for a smoother financial path ahead.

Did you know?

Using a student credit card allows you the chance to create responsible bill-paying habits. With the Discover It^® Student Cash Back Card, you can build your credit with responsible use.¹ With a student credit card, college students may begin to understand the concept of a credit limit, how much available credit they have at a given time, and learn how to avoid going over the credit limit.

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Student credit cards may offer rewards

Credit card issuers offer a variety of student credit card options and rewards. For example, with the Discover it^® Student Cash Back card you can earn 5% cash back on everyday purchases at different places you shop each quarter, up to the quarterly maximum when you activate. With the Discover it^® Student Chrome card you can earn 2% Cashback Bonus^® at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus earn unlimited 1% cash back on all other purchases.²

How to choose a student credit card

Choose one card that works for your situation and avoid signing up for additional lines of credit at every retailer you shop at. Signing up for multiple credit cards in a short period may hurt your credit score regardless of how responsibly you use them. Consider these features before choosing a card:

Consider a card with a low introductory interest rate. Making ends meet and still getting good grades can be a big challenge for students who work part- or full-time while earning a degree. According to Experian^®, it’s not advisable to sign up for a credit card with the intention of carrying a balance. But, the reality of a working student is that there may be a month when an unexpected car repair forces you to carry a balance until you can pick up some extra shifts. A card with a low introductory interest rate can help keep you out of financial trouble while you’re working toward your goals.

Consider a card with no foreign transaction fees. If you’re planning on studying, traveling, or working abroad, some fees could kick in when you’re overseas and handling money. For example, ATMs might charge extra fees to take out cash in a native currency. Foreign transaction fees are just what they sound like — fees levied when making transactions or purchases abroad. Some cards waive those fees. Discover has no foreign transaction fee with any of its credit cards. Other credit cards offer rewards on travel-related purchases. Similarly, if you are heading off to an out-of-state college or university, a travel rewards card or cash back rewards card could be helpful. By accumulating rewards on your purchases, you could make it home for a visit sooner than you think.

Student credit card drawback: You need to be a college student

Remember that when you apply for a student credit card, you may have to provide proof that you’re enrolled in college.

If you’ve graduated, or you’re no longer a student and you’d like to begin building a credit history, a secured credit card could be a valid option. It also can be a way to bounce back if you are looking to rebuild your credit history.

With a secured card, you pay a deposit upfront, which serves as your credit limit and covers the credit card company’s losses if you’re unable to pay your bills. If you demonstrate responsible credit management across all of your cards and loans, you may qualify for an unsecured credit card, which is a more traditional credit card that does not require a deposit.

If you decide to apply for a secured credit card, you may want to choose one that reports to all three credit bureaus (Experian^®, TransUnion^®, and Equifax^®) so you can establish or rebuild your credit history.

If you’re eligible, a student credit card could be a better option since it doesn’t require a deposit. However, if you’re no longer in school, pausing your classes, or you have poor credit, a secured credit card could be the way to go.

Student vs. regular credit card: What's the difference?

Because of the eligibility requirements of most major credit cards, students might not qualify for a regular credit card. They may be more eligible for a student credit card. The primary difference between student credit card and regular credit card qualities lies in the eligibility requirements. While consumer credit cards have strict requirements, student credit cards have more lenient qualifications.

Student credit cards are specifically designed for college students new to credit. They often have lower credit limits compared to regular cards, reducing the risk of accruing high debt. These cards typically don't require a credit history, making them more accessible to students building their credit profiles. Additionally, student cards sometimes offer rewards or benefits geared toward educational expenses. However, they may have higher interest rates and fewer rewards than standard credit cards.

Regular credit cards, on the other hand, are geared towards people with established credit histories. They often offer higher credit limits and more diverse rewards programs, including cash back, travel points, and other benefits. These cards can come with various perks like travel insurance, extended warranty coverage, and access to exclusive events, depending on the card issuer. Regular credit cards typically require a good to excellent credit score for approval and may offer more competitive interest rates. Unlike student cards, they're not specifically designed for those with limited or no credit history.

Different eligibility criteria

Student credit cards and regular credit cards differ significantly in their eligibility criteria, often reflecting their target demographics. If you’re a student wondering what credit card you’d qualify for, remember that student credit cards are tailored for college students, often requiring proof of enrollment in a university as a key eligibility requirement. They are designed for people with little to no credit history, making them more accessible to young adults beginning their financial journey. For example, there is no credit score required to apply for Discover Student credit cards.³

Regular credit cards generally require an established credit history, with a good to excellent credit score being a common prerequisite. This requirement makes them less accessible to those just starting out with credit but more suitable for those with a proven track record of managing credit responsibly.

Different credit limits

Credit limits on student credit cards and regular credit cards often differ considerably, reflecting the differing financial profiles and credit histories of their respective users. Comparing a student credit card and a regular credit card, you’ll notice that a student card is designed for small and emergency purchases rather than major consumer spending.

For student credit cards, the limits are typically lower, often ranging from $500 to $1,000 for new cardmembers. This is more of a conservative approach that helps students manage their spending and reduces the risk of accumulating large debts while they're still learning financial responsibility.

Regular credit cards generally offer higher credit limits, which could possibly start anywhere from $2,000 to $5,000 for new cardmembers with good credit histories. These higher limits are based on the assumption that users of regular credit cards have a more established credit history and a proven ability to manage credit.

Different pricing structures

Credit card fees and interest rates typically vary between student credit cards and regular credit cards, reflecting different levels of risk and the financial needs of cardmembers. Student credit cards often have no or low annual fees, making them more affordable for students with limited budgets. However, they tend to have higher interest rates, as students usually have little to no credit history, representing a higher risk for lenders.

Regular credit cards, especially those requiring good to excellent credit for approval, may offer lower interest rates. These cards might also have annual fees, particularly for cards with extensive rewards programs, but the fees are often justified by the benefits and lower interest rates offered to users with established credit.

Both student and regular credit cards may often begin with a zero or low introductory APR period, which then would increase to the standard rate once the period ends.

Different rewards & perks

Card issuers incentivize their customers through various credit card rewards programs, which include cash back programs, discounts on travel, meals, and other perks. If you’re using a student credit card vs a normal credit card, you may notice that the perks are tailored to the spending habits of students. For example, issuers offer rewards that include cash back on streaming services, food, and gas. When using a student credit card vs a normal card, your issuer may also provide introductory APR rates as low as 0% — meaning you’ll pay no interest on any purchase until after a predetermined number of billing cycles. These can be valuable perks and are available even with a limited credit history.

Different credit building criteria

Credit building with student credit cards versus regular credit cards involves distinct approaches, tailored to the different stages of a user's credit journey. Students may be particularly interested in learning how to start building credit with a credit card because credit score has a lasting impact on eligibility for future loans, apartments, and more. If you’re comparing a student credit card and normal consumer cards, you’ll see that student cards are designed for beginners. While consumer credit cards come with stricter penalties, student credit cards are designed to educate students on the best ways to use credit cards and manage their money.

For instance, a student might use a student credit card for small monthly expenses and pay the full balance each month, gradually building a credit history. Regular cardmembers might use their card for a wider range of purchases and potentially carry a balance, relying on their established credit management skills to avoid high-interest charges and maintain a good credit score.

Student credit cards can have long-lasting benefits

As students transition out of school and into the workforce, the good financial habits they developed with a student credit card could carry on into good lifetime financial habits.

Then, you could use the solid credit history you established with the student credit card to rent a good apartment, get low-interest loans, and access more money for future savings.

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