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When you’re applying for a student credit card, it’s difficult to know all of the questions to ask upfront. Between juggling courses, assignments and studying, there isn’t much time left for researching the ins and outs of the offers that exist.
But you don't have to get lost in a deep internet search to learn if a card checks all boxes. Five important questions can help you get the information you need to determine whether an option is a good fit.
1. Do I have to be a student when applying for a student credit card?
There are a few exceptions to this rule, but most times, you do need to be a student to qualify for a student credit card. Some credit card issuers may even verify that you're enrolled at a college or university. Check a card's eligibility requirements before applying. Don't apply for a student-only credit card if you're not in school, because it can result in a wasted hard pull on your credit report.
Not in school but looking for a first credit card? If you're not a student, there are still several starter credit cards that you might qualify for.
2. Will I need a credit history to qualify?
Some student credit cards require a credit history, which can be an obstacle since students are typically new to credit. When you have little or no credit history, consider whether a student credit card has this requirement. If the information isn’t clear on the card’s website, a phone call to the issuer may get you answers.
If you can’t qualify with a credit history, a few issuers may require a co-signer. This option allows you to qualify for a credit card with the help of someone with more established credit. Usually, when a friend or a family member is willing to be your co-signer, they agree to take on the responsibility of paying the card's balance if you can't.
If you can’t get a student credit card because of your credit history, some alternative startup companies have made it easier to qualify for card options that build credit.
3. Does the issuer report payments to all three credit bureaus?
A student credit card that reports payments to TransUnion, Equifax and Experian is a must-have when you’re trying to build credit. These companies record the information used to calculate credit scores. Many lenders rely on these scores to determine how likely you are to pay them back. Most student credit cards by major issuers report payments to these major credit bureaus, but it’s still important to confirm that they do so that you can successfully establish credit with a credit card.
It’s worth taking that extra step because you’ll eventually qualify for better financial opportunities, assuming you maintain a good payment history and work your way up to good credit. A good FICO credit score of 690 or higher, for instance, can save you money on interest rates when you need to get a car or home loan. It can also help you qualify for an apartment.
4. Can I change my credit card after graduation?
Student credit cards are known for offering little to no rewards and low credit limits. They are meant to ease new borrowers into responsibly using and managing small amounts of credit. While it can be an excellent stepping stone to credit, a student credit card that graduates with you can be valuable over a long term. Some student credit cards make it easy to product change onto a non-student credit card once you get that degree and land an entry-level job.
With new income and more credit history under your belt, you may qualify for better offers with the same issuer without having to submit an application. Student cards with decent features and no annual fee should still be considered even if they lack long-term potential. Without an annual cost, it’s easy to keep your card open after graduation if you keep it active with essential purchases. Closing a credit card, especially your first one, can shorten the length of your credit history and negatively impact your credit score.
5. How can I keep costs low?
As a beginner to credit, it’s important to practice healthy habits in order to avoid debt. Accumulating high-interest debt can delay your long-term financial goals, especially if you have student loans.
Here are a few ways to keep costs manageable:
Read terms and conditions carefully to avoid surprises.
Pay your credit card on time and in full to avoid interest charges and maintain a good payment history. (If you can’t pay off the bill in full each month, contribute more than the minimum payment to prevent debt.)
Set up automatic payments to prevent an overdue payment and accompanying late fees.
Look for a no-foreign-transaction-fee credit card if you’re planning to study abroad.
Review your statements often for potential errors or unauthorized transactions.
Don’t charge any purchases that you can’t afford to pay off.