How Is a Student Credit Card Different From a Regular Credit Card?

How Is a Student Credit Card Different From a Regular Credit Card? article image.

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Unlike traditional credit cards, student credit cards are aimed specifically at college students. They can come with perks that are extra appealing to those in school and new to credit, like a free year of Amazon Prime for students or one-time late-payment forgiveness.

Not all college students will qualify for a student credit card, though. If you're under 21, you must show that you earn enough independent income to make payments, or use a cosigner—which only a handful of credit card issuers allow. But you have other options if you're denied, including piggybacking onto a parent's card as an authorized user.

What Is a Student Credit Card?

A student credit card can be a worthwhile first credit card, helping you build credit from scratch. As you make purchases and pay them off on time each month, you'll show lenders you can be trusted to borrow money in the future.

Over time, your goal should be to attain good credit scores, which, on the FICO 850-point scale, is around 700 or higher. Good credit is valuable when you're ready to get a car loan, for instance, since the better your credit, the more likely you are to get lower interest rates. Even landlords may require a credit check to assess your trustworthiness as a tenant.

As you build credit with a student credit card, you'll have the added benefit of rewards like cash back, free credit score monitoring or incentives to maintain good grades. That can mean earning money for the purchases you make and establishing strong financial habits at the same time.

How a Student Credit Card Is Different From Other Cards

You'll typically have access to a traditional credit card once you've built enough credit history to show you can manage a higher credit limit. A student card can help you get there. Here are the main differences between a student credit card and a regular credit card.

Student Credit Cards

  • Usually have a lower credit limit: Since students are new to credit, card issuers aren't yet sure you can be depended on to pay back big balances. As a result, a student card may have a lower credit limit than a regular card. You often can get access to a higher credit limit once you've made several on-time payments, though, depending on the card.
  • Are generally unsecured: There are two types of regular credit cards: secured and unsecured. A secured credit card, generally an option for those with little or no credit, requires a minimal deposit, which becomes your credit limit. Student credit cards are unsecured, meaning they don't require a deposit.
  • May offer limited rewards: Student credit cards sometimes give cardholders a range of rewards, like cash back on purchases in certain categories. Some regular credit cards, however, offer more extravagant reward options, like sign-up bonuses, airline miles and access to luxury airport lounges when traveling.
  • May provide special benefits for students: On the other hand, a student credit card is more likely to have enticing perks for those in college. Certain Discover student cards, for instance, offer an annual $20 statement credit to cardholders who show they have a GPA of 3.0 or higher.

Regular Credit Cards

  • Have comparatively higher credit limits: Once you qualify for a regular credit card, you'll generally have access to a higher credit line, which means more available credit. But make sure to use no more than 30% of your total credit limit at any time, as experts recommend; otherwise, you'll have a high credit utilization rate, negatively affecting your credit scores.
  • Can be secured or unsecured: Regular credit cards offer more alternatives to those with little or no credit than student cards do. While it's typically harder to get an unsecured card, a secured card can help someone who doesn't have income or a cosigner build or restore credit.
  • Generally require better credit for better offers: Regular credit cards with the most valuable rewards also require higher scores and more established credit history. To get a rewards credit card, you'll usually need a score of at least 670. Student credit cards, however, are designed to provide a way for those new to credit to build a profile.
  • Come in multiple types: There are regular credit cards for all kinds of purposes. Rewards cards can offer cash back or points for travel; balance transfer cards are available to those who already have a credit card balance and want to pay it off over time, interest-free.

When Should a Student Get a Credit Card?

You can apply for a credit card as the primary account holder once you turn 18. A student credit card is worth considering if you earn your own income or choose a card company that allows cosigners (and a parent or another dependable person in your life is willing to help). Your cosigner should know, though, that he or she will be on the hook for any debt you can't repay.

It's also important to know yourself, and whether you're ready for the responsibility that holding a credit card brings. If you're not sure you can avoid maxing out the card or missing payments, it's smart to go for a different credit-building option instead. Then apply for a regular credit card later on.

Alternatives to a Student Credit Card

If you can't qualify for a student credit card or you're not sure it's right for you, try one of these alternatives:

  • Become an authorized user: If a parent, guardian or older sibling has pristine financial history, consider asking to join their credit card account as an authorized user. You won't be held responsible for making payments, but you can use the card (if the primary cardholder agrees). As long as the card issuer reports authorized user activity to the credit bureaus, on-time payment history on the account can help your credit.
  • Get a secured credit card: With its low credit limit, a secured credit card is a smart first credit card if you don't meet a student card's income or cosigner requirements. The deposit generally falls between $200 and $2,000. Once you've shown you can use your secured card responsibly, some issuers will automatically qualify you for an unsecured card.
  • Apply for a retail credit card: Credit cards issued by stores may not have the same stringent requirements as other unsecured cards. But they often come with high interest rates, which makes it particularly important to pay off the balance each month to avoid interest charges. In general, look into other credit card options before going this route.

Student credit cards can help you jump-start your credit history—while giving you benefits that can make campus life easier, or cheaper, in the meantime. Use a student card wisely, and a regular credit card could be on the horizon.