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Credit Karma Guide to Student Credit Cards

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If you want an A+ in credit building, a student credit card could be a great financial tool. In this guide, we'll teach you what kind of cards are best for starting out and we'll share tips to keep you from running up debt before graduation.

It may be tough to think about the future of your money while you juggle a full class schedule, social life and maybe even a part-time job.

But after college, you may want to buy a new car, get better interest rates on your student loans or get your own apartment (so long, roommates and dirty dishes piled in the sink!). We’re rooting for you, which is why we want to let you know ahead of time that for most of those post-college financial goals, you’re going to need healthy credit.

One way to start building up healthy credit now is through credit cards. Using a credit card carefully — keeping your balance low and paying it off on time every month, for example — can help prove to lenders that you can manage credit, and can also give a nice boost to your credit scores before you even hit the graduation stage.

Student credit cards, in particular, are designed especially with students in mind — built with features and tools that teach and encourage healthy credit card use.

If you’re thinking about getting a student credit card, this guide has everything you need to know: why right now is a good time to start thinking about credit, how to find and apply for the right credit card, and then — of course — how to use it responsibly so that you set yourself up with healthy credit for years to come.

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Credit 101

If you were planning to wait to deal with credit until after graduation, here’s why you may want to reconsider.

Why you shouldn’t ignore credit

Let’s start with the basics. Simply put, credit is a value of money that an entity — such as a bank or credit issuer — has loaned you that you’ve promised to pay back, typically with interest. This could include car loans, mortgages and credit cards.

When you apply for credit (whether that’s for a credit card, auto loan, personal loan, etc.), lenders will want to predict your ability to repay the debt.

If you have poor credit, lenders will see you as a risky borrower. That means many of your basic expenses may cost more over your lifetime. We’re talking higher interest rates — which mean higher monthly payments — for auto loans, auto insurance and mortgages. This also may mean paying bigger deposits for utility accounts or apartment rentals. Depending on where you live, employers may also base part of their hiring decision on your credit reports.

If you have no credit, it’s harder for the lender to assess whether you will be a risky borrower, and it might be more difficult to get credit in the first place.

So, even if you have a habit of hitting the snooze button (hey, we’ve all been there), don’t oversleep when it comes to credit. Future you will thank you for getting started now.

Get to know your credit reports and scores

Here are two terms that will become familiar to you as you learn about credit: Credit reports and credit scores.

When you take out a loan or other credit product, the lender will typically report your payments to the three main consumer credit bureaus: TransUnion, Equifax and Experian. Your credit activity will appear on a statement called a credit report.

Based on the information in the report, you’ll get a three-digit credit score, which reflects how well you’re managing credit. FICO and VantageScore® are the most well-known credit-scoring models, but there are many more. Scores typically range from 300 to 850, with 850 being the highest.

People who have scores in the lower range tend to be seen as riskier, so you’ll want scores in the higher range. To get good interest rates on future loans, impress potential employers and qualify for a mortgage one day, you’ll need to work hard to get and maintain good credit scores.


How do you get good credit scores?

Focus on some of the factors that credit-scoring models take into account when calculating your scores.

Making on-time payments and keeping a low balance are typically considered the biggest indicators of responsible credit use. A good rule of thumb is to aim to spend 30 percent or less of your card’s credit limit. So, for example, if your credit limit is $1,500, try not to charge more than $450 on it. Then pay it off in full and on time each month.

Another factor that affects your credit scores is the age of your accounts — as in, the older the better. A credit account with years’ worth of on-time payments shows long-term responsible credit use. So it could be smart to get a credit card while you’re a student and lay the groundwork for healthy credit.

“Plan on keeping the card a long time,” says Freddie Huynh, vice president of credit risk at Freedom Financial Asset Management. “[And] think twice about closing the account.”

If you decide you don’t need the card, you can put it in a drawer or cut it up. Closing the account could end up dinging your scores.

Credit-scoring models also like to see that you have a mix of credit accounts. For a student, paying back a student loan and having a credit card open could show that you can handle two different types of credit accounts: an installment account (the student loan) plus a revolving account (the credit card).

Lastly, try not to open many credit accounts at the same time. Lenders view this as risky behavior, especially for those who are new to credit.

How do credit cards fit into the big credit picture?

After a credit card issuer has verified it can trust you to borrow a certain amount of money — called a credit line — it will send you a card tied to a credit account in your name.

Every time you use the card to pay for something, you’re borrowing money from that credit line that you’ve promised to pay back. As you continually make on-time payments on the credit card over months or years, you’ve proved you can borrow and pay back money as agreed. This can improve your credit scores.

Intro to student credit cards

Student credit cards are no different from traditional credit cards, but they’re typically geared toward younger people. That means these cards typically include a few safety-net features to protect the credit card issuer and some student-focused perks. A student card may have …

  • A low credit limit until you can show you can pay your balances
  • A higher-than-average variable annual percentage rate because of your limited credit history
  • Incentives for good grades in school — yes, really — like cash back or a higher credit limit

Looking for a starter credit card?

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Student credit card terms to know

You may have heard people using credit card terms like APR, and you may not have understood them. You don’t need to know everything, but having a working knowledge of these terms may help you avoid extra charges.

A traditional credit card is “unsecured” because it extends a line of credit to you with nothing put down as collateral. A secured credit card, on the other hand, requires a deposit that becomes the card’s credit limit. The deposit works as collateral for the lender: Borrowers who cannot make payments will forfeit the deposit.

Every month, with either type of card, you’ll need to pay a percentage of your card’s balance (how much you charged to the card). That is known as a minimum payment. You’ll have to pay that, on time, to avoid a late-payment fee.

A grace period is the time between the end of your billing cycle and the date your payment is due. As long as you pay your balance in full and on time, you won’t be charged interest on new purchases during this time. But if you pay off only some of the balance, say $800 of a $1,000 balance, each new purchase you make during the next billing cycle, plus that $200 unpaid balance, will be charged interest.

Interest is typically expressed as the annual percentage rate, or APR, and it’s the rate at which you’re charged to borrow money. The rate will either be variable, which can increase or decrease, or fixed, which won’t change. Cards may charge different APRs for purchases, late payments and balance transfers.


How do I calculate APR?

Here’s a quick tutorial.

Say you have a student credit card with a 20 percent APR, and your balance remained $1,000 every day throughout the month.

  • Divide your balance ($1,000) by the number of days in the billing cycle (30) to get your average daily balance: $1,000/30 = $33.33
  • Then divide your APR (20 percent) by the number of days in the year (365) to get your daily periodic rate: 0.20/365 days = 0.0005 percent.
  • Multiply the balance, the daily periodic rate and the number of days in the month to get the interest you’ll be charged: $1,000 x 0.0005 x 30 days = $15.

Now, let’s say the monthly minimum payment required is 4 percent of the balance on your card. If you made only the minimum payment on the balance each month, it would take a little more than six years to pay off, and you’d pay an extra $561 in interest. Take a more in-depth look at APR here.

Getting a card

When it comes to credit cards, one size does not fit all. Here’s how to tell which student card is the best match for you, and what to know about qualifying for the card.

What’s the best card for you?

You may be interested in a card with a low APR, while your friend may want a card with no annual fee. And you can’t forget rewards programs: Do you like to travel? Or do you just want some cold, hard cash to help pay your bills?

Before we get into what makes a credit card great for a student, we want to emphasize one thing: Be sure you’re not putting more charges on your card just to get rewards or perks. If you don’t pay off your balance in full and on time each month, you may end up paying more in interest fees than what the credit card rewards are worth.

Matt Freeman, head of credit card products at Navy Federal Credit Union, suggests finding a student card that has …

  • A well-built mobile app and an easy-to-use website
  • The ability to make payments online or through the app
  • Transaction and bill alerts to help you track your spending and catch fraudulent transactions
  • No annual fee
  • No foreign transaction fees in case you want to travel or study abroad
  • Credit-monitoring tools to see how your credit is improving with each on-time payment

Qualifying for a student credit card

As you narrow the search for the perfect card, consider which ones you may qualify for as a student.

You typically must be 18 to get your own card, and until you’re 21, you’ll need to either prove you have a steady source of income to make payments or get a co-signer (such as a parent or guardian) for the card. Some issuers will also require that you’re a student in order to get a student card.

The next qualification will be your credit history. Because students typically have a shorter credit history than the average American adult, they may have a more difficult time qualifying for a credit card, says Freddie Huynh, vice president of Credit Risk at Freedom Financial Asset Management. So, issuers may hike your APR and push down your credit limit. But you shouldn’t let this get you down.

“The nice thing about a student credit card is that it’s a product designed specifically for that population,” Huynh says. “It may not have all the bells and whistles of some other cards, but it’s important to remember that it’s a starting point.”

Applying for the card

If you think you’ve got a passing grade on the qualification requirements, you’re ready to apply for a card. Before you start, here’s a tip for keeping your credit healthy: Only apply for one card at a time.

When you apply for credit and the lender checks your reports, it will create a “hard inquiry.” These usually have a small and temporary effect on your credit. But several of these within a short amount of time may hurt your credit scores.

If you don’t qualify just yet, you have options. A trustworthy relative or friend with good credit can add you as an authorized user on their account. You’ll get credit for that person’s healthy credit habits, until your scores improve enough for you to apply for your own card.

Alternatively, consider applying for a secured card. Tying up a few hundred dollars for the deposit may not be ideal for a low-income college student. So if you must get a secured card, aim to improve your credit as quickly as possible so you can potentially move on to a traditional card of your own.

Our favorite credit cards for students

Here are some credit cards you may want to check out. They all come with no annual fee, and they generally accept applications from students with limited credit.

Discover it® Student Chrome

Get 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, plus 1% back on all other purchases.

At the end of your first year, Discover will match your cash back rewards dollar for dollar.

Bank of America® Travel Rewards credit card for Students Earn unlimited 1.5 points for every $1 spent on purchases.

Using your student credit card in a healthy way

Here’s your time to shine: Healthy credit card use generally can lead to improved credit — and greater opportunity to get low-interest loans or credit products if you need them in the future. Here’s how to get on the right foot.

Avoid running up debt

We get the temptation. Your credit limit may be $2,000, but there’s no limit to what you want to put on the card: Study abroad trips, nights out with friends and more.

“It’s OK to use the card,” Huynh says. “Just avoid carrying a credit card balance. Make sure you can pay the card in full and on time every month.”

But pay attention to this distinction. If you pay off your balance in full, make sure you’re also paying your other bills and that you still have money left for things such as rent, food and textbooks. In the next section, you’ll get a few tips on how to avoid that debt.

Set up a budget

If you’re not tracking your finances with a budget, you won’t know if you’re running up more credit card debt than you can handle. Here are a few steps to creating a simple budget.

  • Write down how much income you have each month, from a job or from parents.
  • List your monthly expenses, such as food, school supplies, gas and car insurance.
  • If you have money left after that, split it between “savings” and “fun spending.” Building an emergency savings fund will mean you won’t need to max out your card for emergencies.
  • Consistently track your spending, using a tool that works best for you. That could be a spiral notebook, an Excel spreadsheet, the Mint app or your Notes app — whatever you prefer.
  • This is the most important part: Don’t spend more than you have!

Following these guidelines can help you avoid putting charges on your card that you can’t pay off.

Pay your bill on time

Payment history plays a big part in your credit scores, so it’s important to pay your credit card bill on time, every time — especially as you’re starting to prove your creditworthiness.

Freeman of Navy Federal Credit Union suggests making weekly payments. There will be a repeated, tangible connection between using your card, seeing the balance spelled out on your statement and paying it back.

“The easiest way to do that is to create a pay-as-you-go mentality when it comes to using the credit card,” Freeman says.


Students can fall victim to ID theft, so how can you prevent it from happening?

Identity theft is a crime in which someone uses your personal information to commit fraud, usually for financial gain. Millions of people fall victim to identity theft every year. Unfortunately, students are four times more likely than the average consumer to have their identity stolen by someone they know, according to a 2017 Javelin report. While the following measures can’t guarantee protection against identity theft, there are ways to better safeguard your information and concrete steps to take if you believe you are a victim.

To help prevent identity theft, take these steps:

  • Think twice before handing out personal details about yourself via phone, email, postal mail, text message, social media or in person.
  • Set up account alerts to verify all charges and changes to your accounts.
  • Use strong passwords, avoid using public Wi-Fi, don’t click on suspicious links in emails, and only shop at websites that have “https” in the URL at the checkout page.

You can also catch and report identity theft if it’s already happened:

  • Before making credit card payments, review your statements to check for errors or fraudulent charges on existing accounts.
  • Check your credit reports regularly in case an identity thief opened new accounts in your name.
  • Report errors and fraudulent charges to the company where you have the account. Then you can file a police report and place a fraud alert on your credit reports at the three major consumer credit bureaus.
  • Check out the Federal Trade Commission’s guide on recovering from identity theft.

Sign up for free identity monitoring from Credit Karma to get alerts and help you spot and stop identity theft.

What’s next?

If you started your credit journey early in your student career, you’ll probably have more than a diploma to show at graduation. If all goes well, your credit limit will surge in the right direction and your credit scores will be healthy — setting you up to have an easier time applying for a new apartment, car loan or less-restricted credit card.

Here are some more articles to help you along your credit-building path, with tips to help you from graduation all the way to the “real world”:

About the author: Kim Porter is a writer and editor who has written for AARP the Magazine, Credit Karma,, U.S. News & World Report, and more. Her favorite topics include maximizing credit card rewards and budgeting. Wh… Read more.