Student credit card benefits: What to know
Quick insights
- Credit cards designed for students may help them begin building credit.
- Some student credit cards have more relaxed credit score requirements.
- Some common potential benefits of student credit cards include lower fees, introductory APR offers and rewards programs.
Student credit cards may provide various perks and benefits that could help your day-to-day life as a student or graduate. As useful as they may be, however, opening a student credit card also has some potential downsides to consider. Let’s hit the books and learn the benefits and drawbacks of opening a student credit card to see if applying for one is the right choice for you.
Should college students have credit cards?
As a student, opening a credit card could prove beneficial if you feel ready to take on the financial responsibility that comes with it. Opening a credit card early may help you understand the importance of making consistent timely payments to avoid potential fees or penalties.
Aside from enabling you to start learning about and establishing your credit, opening a student credit card—which is a type of card geared toward entry-level borrowers—may be especially useful as a new borrower. Typically, these types of credit cards have more relaxed credit score requirements, which may help you get your foot in the door if you don’t have an established income or credit history. A few other benefits opening a student credit card may provide you include:
- Cash back incentives: Earning and redeeming cash back from eligible purchases may be a great way to help offset some of your college expenses like textbooks and laptops (or even just a few extra dining hall trips).
- A line of credit for unexpected costs: You may find yourself in a situation where you need to use your credit card to help you cover an unexpected cost—for example, to pay for emergency car repairs so you can reliably get to your classes.
- No foreign transaction fees: Many student credit cards don’t have foreign transaction fees on purchases made outside of the U.S. This may be especially helpful if you choose to take a semester (or two) studying abroad.
If you feel hesitant about opening a credit card, it may be good to speak with a credit professional to learn more about the long-term impacts a credit card may have on your financial health.
Pros of student credit cards
The rewards offered by different student credit cards may differ based on the issuer and card type, so it can be helpful to shop around to find the perks you feel would be the most useful for you. Typically, student credit cards come with pros such as:
- Lower fees: Many student credit cards come with lower service fees.
- Introductory APR offers: Student credit cards may come with low APR introductory offers, which lets you avoid paying interest on purchases for the duration of the offer period. It’s important to carefully read your cardmember agreement first to understand the terms and conditions of the promotion. When this introductory period ends, you’ll start paying interest on your current balance at the rate determined by your lender.
- Rewards programs: Student credit cards usually come with rewards like earning cash back or other redeemable rewards points on eligible purchases. You may be able to earn cash back when you use your card for qualifying purchases at grocery stores, gas stations and more (rewards vary by card and card issuer).
- Student benefits: Student credit cards may give you the opportunity to make use of special student perks. For example, some cards may offer higher cash back percentages if you carry a high GPA. Other cards may include rewards incentives for consistent, on-time payments.
While Chase does not offer student credit cards, the Chase Freedom Rise™ credit card is designed for people new to credit cards, which often includes students. The Freedom Rise card earns 1.5% cash back on all purchases.
Cons of student credit cards
Depending on your student credit card, potential cons may be:
- Higher interest rates: Student credit cards may carry higher interest rates than regular credit cards. This could make it especially important to routinely pay off your card on or before the due date and avoid carrying a balance that would accrue interest.
- Lower credit limits: Student credit cards typically have lower credit limits, putting a cap on how much you can spend. This may make them less advantageous in certain emergency settings if you need to put more on the card than your limit allows.
- Miscellaneous fees: While many student credit cards may have low maintenance and service fees, they might still carry other fees like late payment penalties. So, as you begin to study your student credit card options, it can be helpful to read the fine print to avoid any potential surprises.
In summary
Certain student credit card benefits, like earning cash back on eligible purchases, might perk up the ears of any student running on a diet of noodles over a hot plate. However, it’s important to remember that opening a credit card is only beneficial for your financial health when used responsibly. Before applying, be sure to understand how interest accrues and have a game plan in place to stay on top of payments to fully benefit from your student credit card.
