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Mar 24

How to Get a Student Credit Card and Make It Work For You

Reading Time: 4 mins

SEO description – Student credit cards can work wonders for your financial situation – learn how to secure your first student credit card and make it work for you in this guide by The Odyssey Online.

A student credit card is a powerful tool to reach your financial and education goals – learn how to use it to your advantage!

It’s undeniable: getting your first credit card can be an intimidating rite of passage. It surely comes with great responsibilities and marks your first step into the world of adult finances. But credit cards can also be powerful tools to build long-lasting personal wealth – when used wisely!

Still anxious about taking this step? Don’t fret – student credit cards are designed to guide your way towards financial independence. Learn how below. 

Getting a Student Credit Card: Start Here!

For most Americans, life changes after turning 18. Going to college, leaving your parents’ house, and diving into the world of personal finances are all significant changes that seem to come at once – no wonder over 70% of students feel stressed about their finances!

At the same time, the financial decisions you’ll make now can impact your future. After all, building a positive credit history is a life-long endeavour, and it starts with your first credit card payment. 

In particular, student credit cards are specifically designed to help you navigate the world of personal finance, build credit, earn rewards, and learn how to budget, spend, save, and invest. 

Make Sure You Are Eligible

Qualifying requirements vary depending on your credit card issuer. However, generally, you will need to be a U.S citizen or resident with a Social Security number and a student enrolled in an accredited college or university. You will also need to show proof of a stable income, such as deriving from a part-time job.

Most credit card providers accept applicants older than 18. However, if you are under 21 and don’t benefit from stable earnings, the issuer might require the guarantee of a co-signer with sufficient income and a good credit score. 

Know Your Credit Card Options

While most student credit cards cater to younger users with limited credit history, they don’t all come with the same terms. To make sure that a credit card is right for you, you should compare different offers and take into consideration factors such as:

  • Annual Percentage Rate (APR) – This is the interest you’ll pay each month on outstanding balances and can determine how your debt will grow over time. While student credit cards often come with high APRs, look for the lowest one. 
  • Rewards, bonuses, and other benefits – Some credit cards offer rewards and bonuses such as cash-back and airline points for each purchase you make, including textbooks and school material. Depending on your needs, you might also find some cards offering student-specific perks such as extended warranties and bonuses for high grades.
  • Fees – student credit cards might come with fees such as set up and annual fees. Look out for those that don’t!
  • Credit limit offered – as a student with limited credit history, the chances are that you’ll have to start with a low credit limit. However, some providers agree to review your terms after 10 months or more of using the card. 

Apply For Your Desired Credit Card

Once you have reviewed your options, gathered the documents, and applied – online or in-person – for your student credit card, the issuer will run a hard credit check to review your credit history. 

You’ll then receive a letter of approval or denial (adverse action notice). If you haven’t been able to access your desired credit card, don’t despair. This is quite common, and you can increase your chances of being approved by:

  • Reviewing your repayment habits and following personal finance’s best practices
  • Applying for a secured credit card to build credit
  • Asking to be added to a parent’s credit card account as an authorised user
  • Boost your income by getting a part-time job

Using a Student Credit Card To Your Advantage: 5 Best Practices To Keep In Mind

Obtaining your first credit card can make a difference in the financial choices you’ll make as a student. However, don’t forget that misusing your credit card can have severe consequences and younger users (18-24) have already collected an average debt of $2,312.

Here are some best practices to keep in mind to make your student credit card work for you and offer you the greatest benefits:

  • Use your credit cards to make payments that you can afford to repay
  • Avoid the “minimum repayment” trap – you’ll end up growing your debt and repay just enough to cover the interests
  • Build healthy financial habits, such as budgeting, saving, and starting an emergency fund
  • Pay off your balance in full each month
  • Don’t be late with your repayments if you want to avoid high fees and penalties
  • Keep an eye on your credit utilization – or the percentage of credit limit that you are using. It should not be greater than 30%!

Finally, always check your statements and reports. Errors are common and can cause you to overspend.

Make Better-Informed Financial Choices

The world of personal finance is becoming more complicated every passing day. Make sure to keep yourself up to date with the latest available financial tools, learn the principles of building personal wealth, and work towards a good credit score from day one. 

Your financial literacy can guide you in making the smartest choices when using your credit card!

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. 

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