Starter Credit Card Options: Student Card or Secured Card?

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Student credit cards
Benefits
- No security deposit required. Unlike secured credit cards, you do not have to put down a deposit. If your application is accepted, you’re granted a credit limit, and it doesn't hinge on any kind of upfront collateral.
- No annual fee. Many student credit cards charge no annual fee, which keeps the cost of holding the card low. That’s helpful when you’re first starting out and money may be tight.
- Cash-back rewards. Some student cards offer rewards programs that earn cash back every time you use your card. It’s like using a coupon whenever you shop, but without all the work.
- Student-friendly benefits. Some student cards come with perks like bonus cash back if you maintain a certain grade-point average or a free Amazon Prime Student membership for a year.
- Options for international students. Some student cards allow you to apply even if you don’t have a Social Security number. This is especially helpful for international students who are trying to establish a U.S. credit history.
Drawbacks
- Independent income required. If you’re younger than 21, you must have independent income to qualify for a student card. This can present a hardship for students who aren’t working while they’re in school.
- Can be harder to qualify for. It's a bit of a paradox. To qualify for a card designed for people just getting started with credit, you may need some credit history. If you're new to building credit, there are other options, including secured credit cards.
Secured credit cards
Benefits
- Easier to get. You can qualify for a secured card even if you have little to no credit history or a bad credit history. Some secured cards even process your application without a credit check, which spares you a hard credit inquiry and the accompanying temporary ding to your credit scores at a time when every point counts.
- Potential upgrade path. After a few months of responsible use, some secured cards will increase your credit limit or graduate you to an unsecured card.
Drawbacks
- Security deposit required. You must make a deposit, which usually becomes your credit limit. A deposit of $200 or more is common. You get the deposit back if you close the account in good standing or if you upgrade to a traditional unsecured card. But coming up with that money upfront can be challenging.
- Annual fees are common. No-fee secured cards exist, but they tend to charge higher interest rates. If you opt for a secured card that charges an annual fee, you’ll need to account for that cost in your budget since you’ll also be paying the initial deposit.
- You may need a bank account. If you don’t have a traditional bank account that you can tap into to fund the deposit, you’ll be limited in which secured cards you can choose. There are a few available that can accept deposits in the form of wire transfers or money orders.
- Most don’t offer rewards. With a few exceptions, secured cards don’t tend to offer rewards programs. But over time, with responsible card use, you’ll qualify for other cards with robust rewards.
Alternatives for building credit

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