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Student Credit Cards

by Student Loan Daddy

From helping you build your credit to giving you a fallback for financial emergencies, college student credit cards can be a valuable resource when you’re away at school and on your own.

Whether your car suddenly breaks down on your way to class and needs emergency repairs or you’re looking for grocery money to tide you over until you get your student loan check, a student credit card could be the back-up you need to keep you from ending up financially stranded.

Of course, you want to be smart about how you use those college credit cards. The last thing you want to do, especially when you have tuition and college bills to worry about, is rack up tons of credit card debt that you can’t pay off. But as long as you manage your credit card use wisely and responsibly, college credit cards and prepaid credit cards can be a good way for you to start building a solid credit history.

Student Credit Cards

Start building your credit with a credit card designed specifically for your college student lifestyle. Your class and study schedule may be hectic, but online and mobile account access let you manage your account anytime, from pretty much anywhere. No annual fees and competitive interest rates mean you won’t have to break your budget. And cash-back incentives can let you earn cash rewards on the things you need to buy anyway — things like gas, groceries, and plane tickets home.

Prepaid Student Credit Cards

If you’re looking to build your credit but worried about running up more debt than you can handle, prepaid credit cards may offer the solution you’re looking for. With a prepaid student credit card, you’re going to have to load money on the card before you can use it — which means you’re limited to spending only money you already have. Credit-building features on some prepaid credit cards will have your card issuer reporting your prepayments to the credit bureaus, helping you establish a credit history.

Credit Cards for College Students

College credit cards come in all different types, each offering its own advantages and benefits:

  • College credit cards: These credit cards have been specially tailored for college students. Some student credit cards will reward you with a rate reduction or other incentive when you demonstrate responsible use of your card by making all your payments on time for a certain number of months. Other student cards feature cash back or reward points that you can earn whenever you use your card to eat out, rent a movie, or buy things like books, music, and movie tickets. Some college credit cards will even reward you for maintaining a good GPA.

    Just keep in mind that beginning in February 2010 — under the new credit card legislation — you won’t be issued a credit card if you’re under 21 unless you have an adult co-signer or you can show proof of reasonable income.
  • Reward credit cards: These credit cards will typically “reward” you for your purchases with points, rebates, or cash back. Accumulated points can usually be cashed in for things like free MP3s, gift certificates, movie tickets, airline tickets, and fill-ups for your car.
  • Cash-back credit cards: Cash-back credit cards are a specific type of reward card that allow you to earn cash back on purchases. Some student credit cards will offer more cash back for purchases in certain categories (gas, groceries, travel) than in others.

    Your accumulated cash-back rewards will typically be issued to you as a credit on your card. Depending on the card, you may receive your cash-back reward monthly, quarterly, or yearly.
  • Prepaid credit cards: If you’re worried about getting into trouble with too much credit card debt, prepaid student credit cards offer you an easy way to control your spending. Prepaid credit cards are reloadable credit cards that require you to pre-deposit money before you can use them. By prepaying your card, you won’t be able to spend more money than you have.

    There’s usually no credit check required to get a prepaid card, and certain prepaid credit cards also offer credit-reporting features, allowing you to build your credit history, just as with a non-prepaid credit card.
  • Credit cards for no credit and not-so-great credit: As a college student shopping for your first credit card, you may not have enough of a credit history built up yet to qualify for credit-based student credit cards. In that case, you may want to start off by building your credit with special non-credit-based credit cards for college students or with a credit card specifically designed for new cardholders.

    Prepaid credit cards will sometimes include a credit-builder feature. Another option is secured credit cards, which require you to keep funds in a savings account as a backup: If you ever miss a payment on your secured card, the card issuer can deduct your payment directly from this backup account.

Tips for Picking the Best Student Credit Cards

Several banks and card issuers offer credit cards for college students, and some of these college credit cards are better deals than others. Before you pick the first credit card offer that comes along, make sure you do your research and compare information like interest rates, fees, and terms.

Here are some things to look for and questions to ask to help you narrow down your list to the best student credit cards out there.

What to Look For

  • 0% introductory rates hiding high standard rates. A zero-percent introductory interest rate sounds like a great deal … until you find out, after your introductory period, that your interest rate just shot up to 32 percent. Don’t get sucked in to applying for a high-interest credit card because of tempting introductory rates. When you’re carrying a balance, that high standard rate could end up costing you hundreds more in interest than you saved with six months of zero-percent interest.
  • Introductory rates — strings attached. Besides checking the standard interest rate on the college credit cards you’re considering, watch out for limitations on the introductory rate itself. Some introductory rates apply only to balance transfers, not purchases. If this card is going to be your first credit card, a balance-transfer introductory rate would be worthless since you don’t have any credit card balances to transfer over.
  • Fees, fees, fees. Both fee amounts and types of fees will vary by company. Ask for a list of all the fees a card issuer can charge. The best student credit cards won’t charge you a membership or annual fee; annual or monthly fees tend to be more common with reward cards (although you should be able to find some that don’t charge an annual fee). Most prepaid credit cards and secured credit cards also charge monthly or yearly fees. When you’re researching prepaid credit cards, look for additional fees like reloading fees, ATM fees, usage fees, and non-usage (inactivity) fees.
  • The fine print. Make sure you read everything, no matter how tedious — think of it as required reading for one of your least-favorite classes. Pay attention, especially, to what happens to your interest rate if you miss a payment. In many cases, as soon as you miss a payment, a card issuer can not only revoke your introductory rate but kick you to a “penalty” rate that’s higher than the standard interest rate.

What to Ask


  • Is there an annual or monthly fee? or a one-time activation or “sign-up” fee?
  • Is there a charge for making payments online or by phone?
  • Is there a charge to replace a lost or stolen card?
  • What other fees are there, and when are they charged?


  • If there’s an introductory rate, how long does the introductory rate last?
  • After the introductory rate period ends, what’s the standard interest rate?
  • Is the standard interest rate fixed or variable?
  • Does the introductory rate apply to purchases, balance transfers, or both?
  • Will a late payment cause you to lose your introductory rate?
  • Will a late payment disqualify you from the standard rate and trigger a higher penalty rate?

Grace Periods

  • Is there a grace period on purchases before you start getting charged interest? If so, how many days?
  • Does the grace period still apply even if you’re carrying a balance from the previous month?

Rewards, Cash Back, and Incentives

  • What rewards, if any, does the card offer?
  • Do those rewards apply to purchases, balance transfers, or both?
  • Do those rewards apply only to certain purchases or purchases above a minimum amount?
  • Do the rewards or reward points expire? If so, after how long?
  • What other limitations are there in cashing in reward points?
  • Does the card reward good behavior (on-time payments, staying within your credit limit)?

5 Easy Ways to Avoid a College Credit Card Disaster

As good as college credit cards can be for helping you build your credit, all it takes is a few missteps, and you could end up over your head in debt and with damage to your credit that could last for years. It’s really easy, especially when you’ve just gotten your first credit card, to get credit-card-happy and start charging everything. Before you know it, your debt is out of control and your minimum payments are more than you can handle.

Here are five simple precautions you can take to manage your credit card debt and help keep your credit score intact.

  1. Don’t use your student credit cards to buy things you can’t afford. It sounds like common sense, but this is where most people get in trouble. That iPhone or plasma TV you’d never have the cash to pay for suddenly seems like an easy buy when you’ve got plastic. Here’s the easiest way not to end up in credit card trouble: Unless it’s an emergency, if you wouldn’t be able to afford to pay with cash or a check, don’t charge it.
  2. Don’t use college credit cards as a substitute for student loans. Federal student loans have low, fixed interest rates, as well as borrower benefits that will allow you to postpone making your payments if you’re ever unemployed or experiencing financial hardship. Credit card companies will keep sending you monthly bills, regardless of how broke or out of work you are. Take advantage of your federal student loans first to cover all your school expenses like books, lab fees, and meals, and don’t put your $800 worth of textbooks on your credit card (unless you intend to pay it off right away as soon as you get your student loan check).
  3. Pay off your balance each month. If you follow Rule # 1 and don’t charge anything you don’t have money for, you shouldn’t have any problems with this one, unless you had to run up an unexpected charge because of a financial emergency. In that case, if you can’t pay the full balance, pay as much as you can. Don’t settle into the habit of paying only the minimum due: By paying only the minimum each month, it could take you years to pay off your balance, depending on how much debt you’ve run up.
  4. Sign up for e-mail or text alerts. Some of the major card issuers now offer automatic e-mail or text alerts that can notify you about your current balance and payment due dates. If you’re prone to missing your payment dates or going over your spending limit, use these alerts to make sure you’re staying within your credit line and making your payments on time.
  5. Put your credit cards on ice. If all else fails, and you still find yourself reaching for that credit card whenever you’re driving by Subway or up watching late-night infomercials, here’s one way to force willpower on yourself (without cutting all your cards up): Stick your credit cards in a large Tupperware container (a big bowl works best), fill the container with water, and then stick it in the freezer. The next time you’re tempted to use your cards, you’re either going to have to wait for them to thaw out (giving you time to rethink what you’re about to spend money on) or go after that block of ice with a hammer. Either way, you’ll have time to collect your thoughts, take a breath, and reconsider whether all that time and ice-breaking effort is worth it.

* Student Loan Daddy is a marketer of student credit cards and is not the issuer of any credit cards or prepaid credit cards. Applications for credit cards may be subject to credit approval.

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