Key takeaways
- Student credit cards offer rewards and incentives geared toward students and may be easier to qualify for.
- Credit cards can be a valuable tool for college students to learn how to manage money and build credit.
- To use your credit card responsibly, spend only what you can pay back and make on-time payments to help build your credit score and avoid credit card debt.
College students have plenty to juggle, from classes to social activities to career-building. Along the way, you learn valuable life skills for adulthood. One powerful skill to pick up is how to build credit effectively. By practicing building credit as a college student, you’ll be more prepared for your post-college future.
When used responsibly, your first credit card in college can help you learn to manage money. Check out these seven credit card tips for college students to get started on the right track toward building a strong financial future:
1. Understand that your primary goal is building credit
There are lots of glossy advertisements and tempting promises about credit cards, but your first card is all about building your credit.
Take the opportunity to establish a budget and cultivate responsible habits like paying your bills on time and spending within your means. You can also check your credit score for free with a card issuer’s credit reporting tool or from Experian, one of the credit bureaus. As a college student, your life is already pretty busy, so take advantage of the tools out there to stay on top of your financial responsibilities.
2. Decide which purchases to make with your card
Part of making a budget is deciding not just what you’re going to buy, but also how you’re going to pay for it.
Keep in mind that your first credit card will likely have a low credit limit — perhaps even as low as $200. To practice using the card and making monthly payments, consider dedicating the card to certain monthly bills or purchases, such as:
- Streaming services
- Bus or public transit passes
- Gym memberships
- Monthly prescription refills
- Campus dining card reloads
If you get a student credit card that offers rewards in certain categories, like gas station purchases or dining purchases, you can also consider using the card for only purchases in those categories.
Just make sure that whatever bills or purchases you decide to put on your card don’t push you over your limit. Also keep in mind that your credit utilization — the amount of credit available to you compared to how much you’re using — makes up 30 percent of your FICO score.
Money tip: Experts recommend keeping your usage under 30 percent. So if you only have a $200 limit, you could either stop spending or pay off your balance once you hit $60 to keep your credit utilization low.
3. Stick with one card
Once you’re old enough to apply for a credit card, you might have several card options available to you. But while you’re in college, one card should be enough to handle your needs.
Applying for multiple cards in a short amount of time leads to hard credit inquiries that affect your credit score. Limiting your credit card usage to one card can make your credit-building journey easier to manage alongside a hectic student schedule.
To narrow down your card options and learn your approval odds — without hard credit checks — try using Bankrate’s CardMatch tool. This tool performs a soft credit check, which doesn’t impact your credit score, and matches you with personalized offers and preapprovals from various card issuers.
Keep in mind: Being preapproved for a card is not the same as being fully approved for one. The credit card issuer will make their final decision only after you’ve submitted a full application, which typically requires a hard credit check.
4. Only spend what you can pay back
Remember that your credit limit is the maximum amount you can spend — but it isn’t necessarily what you should spend.
Whatever you spend, you’ll have to pay back — and if you can’t pay it back fast enough, you’ll accrue interest, meaning you’ll have to pay back even more. Many college students are living with tight budgets, so it’s best for them to only buy what they can afford to pay off in full each month to avoid interest charges.
Also, avoid getting into a cycle of only making the minimum payment, if possible. Only making minimum payments means you’re likely to rack up interest charges, which makes it harder to get out of debt.
5. Always pay on time
As the most significant credit-scoring factor, payment history makes up 35 percent of your FICO score. That’s why it’s crucial to always make your credit card payments on time.
No matter how busy your class or social calendar gets, make it a priority to pay your credit card bill by the due date. Setting up automatic payments can help reduce your mental load.
If you can’t pay the full bill, at least make the minimum payment to protect your credit. Just know you’ll start accruing interest on the remaining balance.
6. Build credit first, earn rewards second
When starting off with a credit card, your primary focus should be on building a good credit history with responsible habits, as mentioned previously. Building good credit now could help you access the best credit cards in the future.
That said, having a card that also rewards you for some spending is a helpful way to save money while in college. Even 1 percent to 3 percent off of common purchases like gas or groceries can add up in the long run, and tailoring your spending to certain categories can help you get used to that kind of thinking before you get a better rewards credit card.
Keep in mind: Rewards from your credit card spending will lose their value in comparison to any credit card debt you carry. Prioritize on-time, in-full payments and responsible use before maximizing rewards.
7. When in doubt, pick a student card as your first card
As a student, you can access something valuable in the credit card market — a student credit card. Designed with students in mind, these cards offer benefits geared toward your needs.
The best student credit cards usually have fewer fees and better APRs than credit cards for non-student borrowers with no credit history, as well as options to upgrade to a non-student version after graduation. Student credit card benefits also sometimes include welcome bonuses and rewards for everyday spending in college. You might even be able to get a card with an introductory annual percentage rate (APR) offer that allows you to pay off larger purchases like books or dorm supplies over time before paying interest.
The bottom line
A credit card can help you build up a good credit history and credit score early on, which can lead you to future financial milestones — like buying a house — more quickly and easily. Good credit comes from consistent positive habits. As you use your first credit card, aim to pay your bills on time, avoid overspending and earn rewards responsibly. By following these tips, you could be on your way to your next credit card in just a few years’ time.
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