College can be a great time for a credit education.
I was well past my college years by the time I opened my first credit card, and I sometimes lament the lost opportunity. You see, college students have a unique power in the credit world: the student credit card.
Student credit cards are entry-level cards available only to college students. So, you can only qualify for one if you’re enrolled at a two- or four-year college (or university) as a part-time or full-time student.
Between the simple approval requirements and cardholder perks, student cards are one of the best ways to start building credit. In fact, I can think of five pretty good reasons to get a student credit card while you’re in college.
1. Building credit early can help you in the long run
One strategic reason to grab a student credit card is that you’ll start building credit history early, which can definitely pay off down the road. For one thing, the age of your credit history — specifically, the age of your oldest credit account — factors into your credit score.
As you’ve probably heard in one of those ubiquitous credit score app commercials, your credit score is an important metric that many lenders use when you apply for a credit card or loan. Establishing your credit history early can help boost your credit scores.
If you use your student credit card responsibly, you could have good credit by the time you graduate. Good credit can unlock a lot of credit options that would otherwise be out of reach to someone just starting out, especially as many recent grads have modest incomes at best.
2. No credit history requirement to get approved
Having a strong credit history is important for a lot of credit products; you probably won’t get those premium travel rewards cards if you’re a credit newbie. But student credit cards are designed specifically with first-time cardholders in mind. So, you won’t need so much as a day’s worth of credit history to qualify for a student card.
In other words, you can get a student credit card even if you don’t have a credit report or credit score at all. However, while you don’t need a credit history, you will need some kind of income to get a student credit card (or any other credit card, for that matter).
If you’re over 18 but under 21, you’ll need to have an independent income from employment. If you’re 21 or older, you can also include money from scholarships or grants in your eligible income total.
3. The perks beat most other starter cards
As we noted above, building your credit history early with a student card can help you qualify for great rewards credit cards down the line. But if you don’t start building credit while you’re in college, your first-time card choices get a lot more limited.
The field of starter credit cards for non-students isn’t very large — and it isn’t particularly rewarding, either. Many cards for first-time cardholders are bare-bones, lacking much in the way of purchase rewards or cardholder perks. Plus, many come with annual fees.
In contrast, the majority of student credit cards not only offer competitive purchase rewards, but most of them also come without annual fees. A few student cards even offer small (but still valuable) sign-up bonuses.
4. You won’t need to make a deposit
This ties into the previous point a bit. You see, if you don’t get a student card to build credit early, your first credit card will either be one of those no-frills unsecured cards mentioned above — or a secured credit card.
While secured cards can have a few perks, like modest purchase rewards, they do have one major drawback compared to student cards: a deposit.
To open a secured card, you need to provide a cash deposit, which lives in a locked savings account as long as your credit card stays open. This deposit acts as security in case you stop paying your card bill. (That’s the secured part of “secured credit card.”) If that happens, the bank will close your account and use your deposit to cover your balance.
The deposit requirement makes secured cards a nonstarter (forgive the pun) if you don’t have a few hundred bucks you can hand over to a bank for months on end. But student cards are unsecured credit cards, meaning they don’t have any deposit requirements and you won’t need to pay a dime to open one.
My last reason to get a student card while you can is that it’s a good way to get your foot in the door with a credit card issuer early. Many of the companies that offer student cards also happen to be home to the best credit cards on the market. Having an established relationship with an issuer can sometimes make it easier to qualify for their top-of-the-line cards.
Whatever your reasoning behind getting a student credit card, be sure to use that card responsibly. Building your credit history early can be a boon — but only if it’s positive credit history. Keep your balances low, always pay your bill before the due date, and be smart about opening new accounts. College is a time for learning, so make sure you’re learning good credit habits while you’re there.