There are many things to think about before going to college, including if getting a student credit card makes sense for your financial situation. While credit cards offer convenience and flexibility, they also come with a lot of responsibility. Before applying for a credit card, students and their parents should consider budgeting skills, what expenses a credit card can be used for, and how the monthly bill will be paid. Take the quiz below to see if you're ready to get a credit card in college.
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How does a credit card work?
When you use your credit card to make a purchase, you’re borrowing money that you will need to pay back later. Throughout the month, any purchases you make will be added to your credit card statement. At the end of the billing cycle, you can then either pay your statement in full or make a minimum payment.
If you don’t pay the full balance, the card issuer (usually a credit card company or credit union) will charge interest on the remaining amount, based on the card’s annual percentage rate (APR). Consistently paying your bills on time and keeping your balance low helps build a positive credit history. Good credit can make it easier to rent an apartment, buy a car, or qualify for lower interest rates in the future.
What are the benefits of a credit card?
Although it can be a big decision, there are many reasons to get a credit card in college. When it is used responsibly, a credit card can help students establish their credit report history. Managing a card also encourages healthy spending and repayment habits, such as tracking expenses, staying within budget, and paying balances on time each month. These behaviors help keep your credit utilization ratio low, which is an important factor in building strong credit.
In addition, a credit card can serve as a financial cushion in emergency situations. Cash may not be readily available in some situations, like unexpected car repairs, medical expenses, or last-minute travel plans, making a card a good option. Many student credit cards also come with extra benefits, such as the ability to dispute unauthorized charges or balance transfers. Plus, some cards offer the potential to earn rewards, like cash back or points, which can help you save money on everyday purchases.
When should I wait to get a credit card?
Even though credit cards have many benefits, they may not be the right choice for everyone – at least not right away. In some situations, it may be smarter to wait before getting a credit card in college. You may want to hold off if you don’t have any income or a reliable way to earn money. Without consistent income, it can be difficult to repay your balance each month, which increases the risk of falling into credit card debt.
A credit card may also not be the best option if you’ve struggled with budgeting in the past. If managing your own money has been challenging, borrowing money can make things even harder. Finally, if you plan to rely on a credit card for everyday expenses you can’t afford to repay, it’s best to pause. Using borrowed money without a clear plan to pay it back can quickly lead to debt, high interest charges, and added stress.
If a traditional credit card doesn’t make sense right now, a secured credit card (which requires a cash deposit) can be a safer way to start building credit while learning responsible habits.
Where can I learn more about credit?
One of the best ways to build confidence with credit cards is to educate yourself before applying. Understanding how a line of credit impacts your finances can help you avoid common money mistakes and make smarter decisions. If you’re new to credit or want to deepen your understanding of how it works, these articles can help:
How to Build Credit with a Credit Card
When you turn 18, you are able to open a credit card account for the first time. Learning to pay on time and keep balances low can help you start building a positive credit history as soon as you’re able to.
The Benefits of a Good Credit Score: 8 Reasons to Aim High
Your credit score is an indicator of your overall financial health. A strong credit score can make it easier to qualify for loans, secure lower interest rates, and even save money on things like insurance and housing in the future.
4 Tips for Building Credit by Race Car Driver Courtney Crone
Improving your credit takes time, practice, and patience. These are qualities that translate well from the racetrack to your personal finances. Courtney Crone shares practical tips about developing smart credit habits and focusing on your financial goals.
How Student Credit Cards Can Build Good Money Habits
Student credit cards can help set you up for long-term financial success. They encourage healthy money habits, such as budgeting, tracking your spending, and making on-time payments.
What is the Difference Between Debit and Credit Cards?
While debit cards allow you to spend what’s in your bank account, credit cards let you borrow up to a set credit limit. Beyond that, there are other key differences between the two, including security and fraud protection.
The bottom line and next steps
Did you get the results you expected from the quiz? If not, that’s okay. The bottom line is that your credit knowledge will be built over a period of time, not overnight. Be patient and kind to yourself. Review the resources above, strengthen your budgeting skills, and consider retaking the credit card quiz when you feel more confident.
If you are ready, choose a credit card that fits your needs and supports responsible habits. No matter which card you choose, paying your balance on time and in full each month is the most important step, as it only takes one missed payment to potentially hurt your credit score. Credit card issuers won’t give you a pass for being a student, but smart habits now can help shape your future financial success.
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