What to know before getting your first credit card as a college student
Originally Posted On: https://www.iquanti.com/
Establishing credit is important for everyone. Having a good credit score helps you qualify for credit cards, car loans or even a mortgage, and the best credit scores will get you the lowest interest rates. Landlords may check your credit report before renting to you, and some employers look at your credit report before hiring you. The length of your credit history is one factor that contributes to your credit score, so getting a credit card in college is a good way to start the clock on your credit.
What should I look for in a credit card?
A college student may not qualify for every card, but you should be able to find credit cards for college students with the following benefits:
- No annual fee: If you’re on a budget, choose a card that doesn’t charge a fee just to keep the account open.
- Cash rewards: You should look for a card that offers at least 1% cash back on purchases. Even better, many cards have bonus categories that offer a higher cash back rate. Choose a card that has good rewards in the categories when you spend the most money.
- Low intro APR: APR is the annual percentage rate of interest. Low intro APR on purchases can help you save money if you need to run a balance. For example, maybe you need to buy a computer at the start of the semester, but you don’t have the full amount saved up. You can use your low APR card to spread payments over several months without having to pay much interest.
- Reporting to all three major credit bureaus: Your credit report and credit score are compiled by TransUnion, Experian and Equifax. A card that reports your account activity to these major credit bureaus is essential to help you establish a credit history.
How can a college student qualify for a credit card?
Federal law requires credit card applicants under 21 to either have enough income to pay their credit card bills or to have a co-signer. Income can include pay from a job, unemployment benefits, or scholarship money that you get in regular increments rather than as a lump sum.
If you’re 21 or older, you can include any source of income that you have a reasonable expectation of access to, such as a spouse’s income.
Look for pre-approved credit card offers in the mail to see what’s available to you. These are the types of cards you may be able to access as a college student:
Student credit cards
Credit cards for college students are more likely than general cards to approve applicants with little to no credit history. There may be perks geared toward college students, such as a cash bonus for maintaining good grades. The card issuer will usually verify that you’re a student.
Secured credit cards
A secured credit card gives you a credit line backed by a refundable deposit you provide. The credit limit is equal to your deposit, and the card issuer will keep the deposit if you don’t pay the bill. Once you establish a history of responsible use by paying the bill on time each month, you may be able to apply to have your account converted to an unsecured credit card and have your deposit returned.
Become an authorized user
You don’t need a credit score or income to become an authorized user on someone else’s account, you just need the permission of the account owner. You’ll have your own card, but the account owner will be responsible for paying the bill if you miss a payment.