Everything You Need To Know About Student Credit Cards

College is a time of new experiences and greater independence, especially when it comes to managing your money. One important tool that can help you take control of your finances is a student credit card. Whether you’re an existing cardholder or curious about applying for a credit card, use this guide to learn how a student credit card can help you begin building a strong financial future.

What is a student credit card?

A student credit card is designed specifically for college students who are new to credit. If you're currently attending or planning to attend a university, community college, or other higher education institution, this type of card could be a great fit to start building credit. Since most students don’t have a long credit history or a high income yet, they are often most likely to be approved for a student card.

Typically, student credit cards offer a low initial credit limit, so college students can become comfortable with how credit cards work without the risk of overspending. Applying for a student credit card to help you build credit in college can help you develop good financial habits early on.

How does a credit card work?

A credit card allows you to borrow money from a bank or credit card company in order to make purchases. Once you’re approved, the credit card provider will establish a credit limit, which is the maximum amount of money that you are able to borrow at one time. You can then use your credit card to make purchases at grocery stores, gas stations, restaurants, shops, and more. 

Each month, you will receive a credit card statement that lists your purchases and shows how much you owe. You can either pay your balance in full to avoid interest or make a small payment and carry the balance over to the next month. Just keep in mind that interest will start to accumulate if you don’t pay in full. 

Why should I get a credit card in college?

If you’re a college student, you know that expenses can pop up any time. From a last-minute textbook to a surprise pizza night with your friends, you never know when you’re going to have to pay for something. Besides convenience, here are some other reasons to get a credit card in college:

1. You’ll build credit

Credit can play a major role in your life, so college is a great time to start building it. Your credit score shows lenders how responsible you are with managing credit, and payment history is a big part of that score. Credit scores are calculated based on information in your credit report from major credit bureaus, such as Equifax, Experian, and TransUnion. Using your credit card for small, regular expenses during the school year, like streaming services or textbooks, and paying on time each month can help boost your credit score. Good credit makes it easier to qualify for loans, get better interest rates, and receive a credit line increase in the future.

2. You’ll have payment flexibility

While it’s best to pay your entire credit card balance each month, credit cards offer flexibility when that’s not the case. You have the option to pay the balance in full, the minimum payment due, or any amount in between. Credit cards are also helpful for occasional or unexpected expenses, like school supplies, moving costs, or a big purchase you want to pay for over time. Because these purchases aren’t routinely in your budget, a credit card can relieve some of the burden of paying for these fluctuating expenses right away.

3. You’ll be ready for emergencies

The use of a credit card doesn’t replace an emergency fund or the need for budgeting. However, a credit card can help offer a sense of financial security in dire situations when you don’t have cash on hand. For example, your car breaks down and you need to pay for it to be repaired, or one of your relatives passes and you want to fly to the funeral. In addition to handling unexpected expenses, a credit card offers added security. If your card is lost or stolen, you’re protected from unauthorized charges, unlike cash. 

4. You’ll gain financial independence

Another great perk of credit cards for college students is financial independence. Being in charge of your credit card statements and paying your bill on time are good ways to feel comfortable with your finances without always relying on your parents. Also, if your income fluctuates due to your class schedule or a side hustle, a credit card can help cover expenses between paychecks. 

What can I use a student credit card for?

When it comes to your student credit card, your purchase possibilities are almost endless (as long as the cost is within your credit limit and budget). While having this much buying power is exciting, student cardholders should always keep track of how much they are spending, and prioritize needs over wants. A few 1st Financial Bank USA cardholders shared how they use their cards as a student in the following 1FBUSA reviews: 

“This month I used my credit card to buy gas to get to my community college. It has been super helpful to have such a low credit limit, but still build my credit score!” - Kaylee, 1FBUSA cardmember from Illinois

“I was able to pay for my college textbooks before my financial aid was posted to my account. It was very helpful and made my summer semester enrollment less stressful.” - Dylan, 1FBUSA cardmember from Nevada

“I started a new job and I needed uniforms and work shoes. My credit card came in handy. I only use it for emergencies and having to pay out of pocket for company attire was indeed an emergency!” - Jadon, 1FBUSA cardmember from Pennsylvania

“I was able to use my credit card to buy necessities for dorm life such as towels, bedding, and hygiene products. Without my card I wouldn't have been able to purchase any of those items.” - Abby, 1FBUSA cardmember from Iowa

What is the best advice when using a credit card?

Having a credit card can be a valuable tool for a college student. However, it’s important to build your credit with responsible use of the card. Following these credit card tips may help you avoid real-life credit mistakes:

1. Pay your bill on time each month

Aim to pay your credit card balance on time and in full each month. Making regular monthly payments can help improve your credit. A positive credit history can make it easier to rent an apartment, buy a car, or qualify for better loan rates in the future. When potential lenders review your credit report, they’ll see evidence of your ability to make on-time payments.

2. Treat your credit card like a debit card

Since your credit card doesn’t use the money in your bank account to make purchases, it can seem like you have more money to spend than you actually do. If you were to think of your credit card like a debit card, it could eliminate the possibility of overspending. For example, if your bank account shows a balance of $350, you wouldn’t allow yourself to spend more than $350. Just remember that credit isn’t free money, and you should track your spending to stay on top of it.

3. Focus on needs, not wants

While there are certain purchases you should use your credit card for, a general rule of thumb is to primarily use your card for your needs. Tempting purchases in college, whether it be an Instagram-worthy vacation, a new pair of sneakers, or the latest technology for school, can wait until your needs are met. If you do treat yourself, look for student discounts or use rewards to save money.

4. Monitor your account on a regular basis

Regularly check your credit card activity through your bank’s mobile app or website to stay on top of payments and spot any unfamiliar charges. If you see something suspicious on your account, report it to your credit card issuer immediately to protect yourself from credit card fraud.

Now that you understand the basics of student credit cards, you’re one step closer to becoming a confident, responsible cardholder. Not only are credit cards great in emergencies, but they can help you build a sound financial future and reach your financial goals. As you explore all that college life has to offer, a student credit card can help you gain confidence, independence, and financial stability. Consider making a student credit card part of your college journey today.