What makes a student credit card different from other cards?

Every academic year, there may be college students who arrive on campus without much in the way of credit history. This is normal, but presents lenders with unknowns when evaluating a student’s creditworthiness for a credit card. This is where student credit cards may come in, as a helpful tool for people new to credit. Having a favorable credit report and a good credit score could have a major positive impact on your financial life.

What are the requirements for obtaining a student credit card?

Student credit cards are usually unsecured cards with a lower barrier to entry compared to typical credit cards. That means unlike secured credit cards, they are issued without the applicant having to put down a cash deposit as collateral. They work much like regular credit cards—and for people with a limited credit history they may offer a pathway to building and demonstrating responsible spending and borrowing habits.

The basic requirements for obtaining a student credit card are as follows:

• The credit card applicant must be at least 18 years of age.
• Applicants under the age of 21 have to present proof of independent income or apply with a co-signer (if permitted)—usually a parent, guardian or working spouse—who is able to demonstrate proof of income on the application.
• Many student credit cards come with an explicit requirement of showing a student ID or other proof of university or community college enrollment by the primary cardmember.

Additionally, while having a track record of student loan payments can be helpful, no prior credit or payment history may be required to qualify for your first student credit card. Always check with the card issuer to understand the specific details and requirements for qualifying and receiving your first card.

How are student credit cards regulated by the federal government?

The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 requires credit card issuers to assess independent income sources for applicants who are 18-21 years old. Congress legislated this change to federal laws in the wake of the 2008 financial crisis, with the intent to help students avoid racking up excessive credit card debt.

The CARD Act changed federal laws on how student credit cards could be marketed both on and off campus. For example, credit card marketers must keep at least 1,000 feet away from a college or university campus when offering sign-up gifts to reward students for filling out an application. The law also set limits on the interest rate increases credit card issuers may impose.

How student credit cards differ from secured credit cards

A student credit card works the same way as a regular credit card, in that no deposit is required, hence the term unsecured. However, secured credit cards can be helpful to young people who might otherwise be unable to qualify for a student credit card. This is a category that includes many young people who are not enrolled at university, such as new military recruits and those individuals undergoing on-the-job-training in a range of industries where a college degree is not required.

Chase does not offer student credit cards or secured credit cards, but other card issuers may. To apply for a secured credit card, an applicant will typically deposit somewhere in the range of $200 (for lower credit limits) all the way up to $2,500 for secured cards with higher credit limits. This collateral is usually the same amount as the initial spending limit on the card.

Unlike credit cards for people with more lengthy credit histories, a secured credit card may initially come with the downside of a low credit limit. Nonetheless, by not exceeding the issued limit and making payments on time, an individual with a secured card may be able to increase their credit limit and expand credit card options in as little as six months.

Benefits of a student credit card

A student credit card may come with attractive features such as:

• Introductory APR offers on purchases and balance transfers.
• Cash back on every purchase or specific types of purchases that students often make, such as at grocery stores and major retailers.
• Travel rewards that would appeal to students studying abroad or making spring break flights or car rentals.
• Student specific perks such as rebates on textbooks, clothing and laptops, tablets and smartphones.

The bottom line

A student credit card, a secured card or another card for those new to credit may be a good way for someone without much of a credit history to build credit. Some student cards require proof of college or university enrollment, while others do not—check the card terms and conditions before applying.