How is a student credit card different from a debit card?
When you use a student credit card, you’re essentially taking a loan from the credit card issuer for each purchase. So when you send at least your minimum payment by the payment due date, you’ll start to build a credit history that shows how responsible you are with your money. Debit cards, on the other hand, draw from your checking account on each purchase, so you’re not paying back a loan and are not building a credit history. Also, student credit cards often offer more protection on your purchases than debit cards because you’re not responsible for purchases you didn’t make.
Why should I care about building a credit history with a student credit card?
After college, you may want to apply for a car loan or an apartment lease. Both often mean a check on your credit history. Many employers check your credit history before offering a job as well. Responsibly using a student credit card while in school can help you establish a credit history that opens doors for you later on.
Do I have to spend a lot on my student credit card to establish a credit history?
No, you don’t need to pay off big purchases to establish credit. You can establish a credit history by making small purchases and then paying them off on time.
Do I need a lot of student credit cards to start a credit history?
No, you can start a responsible credit history with one card that’s right for you by making at least your minimum payment by the due date as indicated or each statement.
When do I have to pay interest on my student credit card purchases?
After you make a purchase with your student credit card, you’ll receive a statement with your total balance. If you pay the balance in full before the due date on your statement, you won’t have to pay any interest charges. If you pay less than the full amount, you’ll be charged interest based on your Annual Percentage Rate and the terms of your card. That’s why lower Annual Percentage Rates are better. But the best idea is simply to use your student credit card for purchases you can afford and pay them back in full by the payment due date.
Should I consider a student credit card with an annual fee?
Probably not. It’s unlikely that students looking to establish their credit history would really benefit from a credit card with an annual fee—most annual fee cards are only worthwhile if you spend a lot so your rewards make up for the fee. Fortunately, most student credit cards have no annual fee.
What kind of mobile or online features do student credit cards offer?
Many student credit cards offer free online tools to help you track and manage your spending. Some offer e-mail, text or other mobile reminders that can help you avoid fees. Look for automatic bill payment options and a mobile app for your student credit card as well.
Can I apply for a student credit card over the phone or online?
You can apply for a student credit card online or by mail if you’re at least 18 years old. To apply for a student credit card over the phone, you must be at least 21.
Can’t I just establish credit by having my parents add me to their card?
Unfortunately, the answer to that question is “It depends.” Many credit card issuers add you to your parent’s account without requiring your social security number. That means you’re not getting credit for on-time payments with the credit bureaus and not building your credit history. If you want to be sure you’re establishing credit, you may want to open up your own student credit card account.
Do I need a co-signer on my student credit card?
As long as you have an independent ability to pay back your credit card purchases, many issuers do not require a co-signer. If you cannot pay independently, however, then most will require someone, typically a parent, to co-sign.
What’s the difference between a store card and student credit card?
Lots of retailers offer “closed-loop” store cards. That usually means you can only use the card at the store’s locations. A student credit card isn’t limited to just a few retail locations and offers access to millions of merchants nationwide.
How do rewards work on student credit cards?
Some student credit cards offer rewards, usually in the form of points, miles or cash back. And you generally earn your rewards as a percentage of your purchases. After you’ve earned rewards, you can redeem them for things like gift cards, merchandise, online shopping or cash. Sometimes points and miles can be harder to understand than cash back. That’s because 100 points don’t always have a full $1.00 of value when you redeem. Cash back is often more clear because the value is always in simple dollars and cents. Discover it for Students is a cash back student credit card.
