Student Credit Cards - Compare & ApplyBy Joe Taylor Jr.
Many college graduates over the age of 25 remember trading a completed credit card application for a free t-shirt, a pizza, or even a plane ticket. Today, strict rules keep students under the age of 21 from applying for credit cards without a co-signer. Building your credit history with a student credit card requires an understanding of personal finance you probably won't get in a college classroom.
Ins and outs of student credit cards
Like other credit cards for limited credit, student credit cards rarely offer great interest rates or high credit limits. However, most credit score algorithms rate your risk based on the age of your oldest open account. Your chances of locking in a good rate on your mortgage or car loan later in your 20s improve if you open a solid student credit card not long after your 21st birthday and use it responsibly.
Today's best student credit cards include tools that can alert you to upcoming payment due dates and real-time transaction thresholds. Instead of triggering overlimit fees by covering the last round of drinks for your friends, a good student credit card will send you a text message warning you not to use your card until you make a payment.
What to know about student credit cards
Student credit cards come with restrictions enforced by the Federal Reserve:
If you can drink legally, you can apply for your own credit card. You'll have to wait until you turn 21 before you can get plastic in your own name.
Banks need a really good reason to interrupt you on campus. Though lawmakers intended to banish so-called "intercept marketers" from college campuses, some banks exploit a loophole that permits donors and promotional sponsors to do business on college property. Just because the bank's allowed on campus doesn't mean your college has reviewed the deal they're offering.
Lenders can't trade a promotional freebie for your application anymore. The best credit cards offer truly great signup rewards, like free round-trip flights or bonus cash back.
Income counts. Banks used to set credit limits on new student credit card accounts based on your future earning potential. Today, your current ability to repay your debt determines how much a bank can lend you.
Though lawmakers and consumer advocates have campaigned to keep banks from exploiting young consumers, you're ultimately responsible for your own financial future.
Watch out for potential student credit card pitfalls
Applying for more than one or two credit cards in a short period of time can damage your credit score, especially if you already have a "light" credit history. Use these tips to help choose a new student credit card wisely:
- Understand the impact of applying with a co-signer. Although you can get around the Fed's age limit by recruiting a co-signer, your decision could impact your personal and financial well-being. You're giving up privacy, since your co-signer can see every purchase you make. More importantly, you're tying your credit score to that of your co-signer. If your co-signer hits financial turbulence, the bumps will show up on your credit report, and vice versa.
- Avoid applying for credit cards on impulse. Though banks generally can't solicit new credit card business on campus, you'll see their representatives roaming around off-campus events and at popular bars and restaurants. Banks rarely promote their best zero percent credit cards next to beer stands.
- You can usually do better than your college's affinity credit card. Some banks have signed deals to offer affinity credit cards that generate donations for cash-strapped colleges. School spirit's great, except when it means giving up a better credit card deal.
Instead of jumping at the first offer you see on campus, use the listings on our site to compare the best credit card reward programs from multiple lenders. You're going to hold on to your first credit card for a while, so it pays to get the very best terms from the beginning.