Credit cards can open a world of financial opportunities to young adults — provided they use them responsibly. College students just beginning the credit card scene may benefit from applying for student credit cards to build up their credit score and improve approval chances.
At the core of any successful first credit card is research. Narrow down your search by targeting cards requiring no or minimal credit history history requirements.
How to Apply
College students can take advantage of college student status to build their credit quickly, since many can get approved for their first card even without established credit histories. But it’s essential that they choose an appropriate card according to their goals: some cards focus on building or repairing credit while others offer features like rewards, cash back offers and low interest rates.
Students need to budget effectively in order to pay their monthly balance, track spending and manage debt in a responsible way. A credit card that requires deposits or collateral may help students keep debt below a certain limit.
Limit the applications they submit as each inquiry can affect their credit score and could erode it quickly, making it harder to obtain affordable loans after graduation or qualify for other financial products.
When applying for a credit card, it’s essential that applicants provide accurate information regarding their income. Credit card issuers use this data to assess whether applicants can afford minimum payments on the new account; some student cards offer lower income thresholds so that even students with annual income of few thousand dollars or less may qualify.
Though many may assume credit cards are only used by wealthy individuals, most Americans carry at least one in their wallets. Therefore, applying for one during college provides young adults an excellent way to establish positive credit histories while gaining invaluable experience managing a financial product.
If a person under 21 lacks independent income and they require co-signer help to qualify for a credit card application, they will require one. Also, some credit card companies only offer cards to individuals at least 18 years old; yet college students still may be able to open credit cards if they can show evidence of independent income or secure co-signer assistance for the application process.
Eligibility Requirements
Credit cards can be an effective financial tool that can benefit college students immensely. They allow you to establish credit history and score while potentially unlocking rewards and perks; however, use of these credit cards responsibly is key – having good credit could prove invaluable when buying a car, apartment or house in the future!
Student cards can provide new borrowers with an accessible entryway into credit by offering low limits and an intuitive spending structure. To qualify for these cards, typically you need to be enrolled as a student – most issuers verify this – however some cards offer applications from nonstudents or individuals with no college affiliation, although you will still need sufficient income to meet minimum payments on them.
Beyond age and income requirements, other considerations are key when determining if it makes sense for you to apply for your first credit card while attending school. Some card issuers require proof that you’re full-time student by providing documentation from your institution such as an official letter from them or current ID card, while other cards accept alternative proof like academic transcripts or financial aid award letters as evidence of enrollment.
If your income falls short of qualifying for a student credit card, finding an adult co-signer might be an option. They typically include parents or guardians but you may also look into store credit cards which typically have less stringent requirements and can even be used by high schoolers.
Apply for only one or two cards at a time, as multiple inquiries can have an adverse effect on your credit score in the short term. Be wary of using credit cards to buy things you don’t actually need as this could quickly spiral into unmanageable debt.
Fees
Credit card debt can be an enormously detrimental burden. Most cards charge double-digit interest rates and carrying a balance on them can destroy your credit rating. Students in particular must make every effort to pay their bills on time in order to avoid incurring uncontrollable debt while attending school.
Students have various financing options available to them in addition to credit cards for paying tuition and expenses. Student loans and parent equity lines generally offer better terms than credit cards; however, students may be tempted to use credit cards – particularly if they lack enough ready cash at the beginning of each semester – in order to pay tuition bills and expenses. Unfortunately this could be costly mistake: in addition to high interest rates charged by credit card companies, your college may charge additional processing fees when paying by plastic.
To secure a credit card, it’s likely necessary to present evidence of regular income from either employment or another source as proof that you can make timely payments. If you are under 21, an adult co-signer will usually be necessary as they become financially responsible if payments are missed by the borrower.
Some students may be able to obtain their own card without needing a co-signer by providing proof of income or having their parent act as an authorized user on their account. If this option is taken, be sure to ask whether the issuer reports authorized user activity to major credit bureaus.
As a student, managing a credit card can be an invaluable way of building good money habits and improving your credit rating. Be sure to pay your balance off in full each month to avoid interest charges and keep spending under control in order to protect your score. Keep track of spending with Rocket Money’s free mobile app that connects your student card(s) and debit card to provide an overview of your finances and ensure timely payments!
Interest Rates
Credit cards can be an effective financial tool for college students, yet their usage can also be dangerously risky. You’ve likely heard stories of people amassing debt and damaging their credit ratings through reckless spending; to prevent such problems from arising for yourself, stay on top of your spending by paying each bill on time and in full each billing cycle, and learn budgeting as part of a proactive plan to stay out of trouble with debt accumulation and ruinous scores.
Credit scores have an enormous effect on everything from the interest rates on personal loans and car loans to your eligibility for apartments or cars, and eventually even purchasing homes someday. A great way to build up your credit is with a student credit card which offers lower interest rates than traditional cards – perfect for emergencies as well as covering costs related to school like meal plans and textbooks!
For new college freshmen or sophomores who are still under 21 years of age, cosigning may be required in order to obtain credit cards on your own. If however, older students or those 18 and over who can demonstrate steady employment can apply and get approved on their own for credit cards on their own.
While researching student credit cards, make sure that when selecting one the introductory annual percentage rate (APR). This rate usually offers the lowest interest rates available and will remain in effect for a set amount of time; after which it could increase and add further debt burden over time if your balance remains outstanding each month.
If you have an excellent history and high credit score, ask your card issuer to reduce your interest rates. Though this won’t guarantee success, it won’t hurt to give it a shot!
By following these tips, you can safely use your credit card in college and be prepared for life’s milestones. Make sure you track spending and pay bills on time with Rocket Money’s free financial management app which connects all of your student cards and debit cards for a comprehensive view of your finances.
