Are you a college student looking to apply for your first credit card? There are numerous credit cards designed specifically for your needs. Many credit card issuers are willing to take risks with students in hopes of creating new, credit savvy customers. In most cases, parents don’t have to cosign – and if you’re over 18, student credit cards are a great way to start building your credit.
Student Credit Card Basics
Many students only have access to credit because their parents gave them a credit card attached to their personal bank account. Using your parent’s credit will not improve your credit score or build your credit history. Without credit it will be nearly impossible to get a car loan, home mortgage, or other line of credit without the help of a cosigner or partner. Student credit cards give you the chance to build positive credit on your own.
Credit card companies recognize the value of offering opportunities to students and new borrowers. Although some lenders require a cosigner, typically, a student credit card works the same as standard cards issued by major financial institutions and banks with a few exceptions:
- Lower Credit Limits: With little or no credit history, a lender is taking a bigger risk with a student. As a result, the credit limit is kept low, usually between $500 and $1,000, to limit the risk to the lender if the accounted is defaulted.
- Higher Interest Rates: Since students pose a credit risk, higher interest rates also apply to student credit cards. Higher rates help limit the potential loss from account defaults and spreads the cost across high risk accounts.
- Account Cosigners: If required, a parent or guardian signs an agreement to back-up the loan if the student has trouble making payments. A typical credit limit is $500 and the cosigner has control over whether an increase in the limit is accepted.
Before You Apply
Before applying for any student credit card offers, consider the following tips:
- Be sure you can afford the minimum monthly payment. A representative can assist you over the phone– or you can find many helpful tools online to determine your payments. Consider carrying a lower balance if payments are too high. Or, don’t carry a balance at all and only charge what you can afford to pay off each month.
- Understand the fees that will be applied if your payment is late or if you miss a payment. These fines will be substantial if you’re a new borrower.
- Understand how introductory offers work. Intro rates are only temporary! Crunch the numbers and see if you can afford to carry a balance after the intro period is over. If not, make sure you can pay off the balance or reduce it to a manageable level beforehand.
- Don’t apply for a credit card just to get cool stuff. Applying for too many offers sends a message of desperation to creditors and lenders who may deny future applications.
* See a complete list of credit cards for students →