Getting a credit card while youâ€™re in college can set you up for financial success, provided you avoid racking up unnecessary charges. If you are over 18 and have a steady income, applying for a card now will kick start your credit history, and you can start building that all-important credit score.
Learning how to choose and use the right student credit card is relatively simple. Make sure you avoid annual fees and go with a bank or credit union you can trust. When you get the card, make sure you use it responsibly and pay the balance in full and on time every month. If you do these things consistently over time, you can leave school with an excellent credit score. And if you want to rent an apartment or buy a car, having a good credit score is very important.
on Capital Oneâ€™s website
The information related to Wells Fargo Cash Back CollegeSM Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.
The information related to Bank of AmericaÂ® Travel Rewards Credit Card for Students has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.
This credit card offers a snazzy rewards program: rather than accumulate points, youâ€™ll get a cash rebate instead. All you have to do is make a purchase. At the end of the month, youâ€™ll get a rebate of 3% of gas, grocery, and restaurant purchases, and 1% of all other purchases deposited back into your Golden 1 savings account at the end of the month. Anyone who lives or works in California is eligible for credit union membership.
The most important thing to consider when looking for a student credit card is that it charges no annual fee. You should never have to pay to build your credit score. Fortunately, most student cards donâ€™t charge you an annual fee, but itâ€™s still something to watch out for.
The second most important thing you should keep an eye out for are tools that help you learn about credit or even promote good credit-building habits. For example, some student credit cards will give you a free monthly FICOÂ® score update. You can use this freebie to see in real time how your credit score changes as you build credit history by keeping the card open, or paying down your credit card balance, for example.
The last thing you should be considering when picking out a student credit card is the rewards program. I know, I know, it seems counterintuitive. But stick with me â€” Iâ€™ll show you why in the next question.
Rewards cards are nice to have. But if youâ€™re a college student, hereâ€™s the truth: you probably wonâ€™t spend enough to earn meaningful rewards.
Why? With a good rewards program, you can earn points or cash back. A small percentage of your monthly spending can add up quickly. However, given the tight budget that most college students live on, it will probably take a while to earn meaningful rewards. For example, if you earn 1.25% cash back and spend $300 a month on your card, you would earn $45 of cash back during the year.
College students are very good at making good use of $45. And our favorite card offers a great cash back rewards program. Just donâ€™t expect to earn a lot of cash back, given the tight budget of a college student.
There are a lot of great reasons why you should get a credit card, as long as you can commit to using it responsibly.
The single biggest reason why you should get a credit card as a college student is because you can start establishing a credit history now. When you graduate from college, you will need a good credit score to get an apartment. And your future employer will likely check your credit report. Building a good credit history while still in college will help prepare you for life after graduation.
Getting a credit card while in college can also train you to develop good credit habits now. But you need to be honest with yourself. If you find that you canâ€™t avoid the temptation of maxing out your credit card, you might want to switch to a debit card or cash.
Finally, getting a credit card now can be the motivation you need to start learning about credit. These skills arenâ€™t hard to learn, and they could save you thousands or even hundreds of thousands of dollars later in life (when you want a mortgage, for example).
Many years ago, credit card companies would market on college campuses. You could get a free beer mug or t-shirt in exchange for a credit card application. And you would be able to qualify for a credit card without having any income. The Credit Card Accountability Responsibility and Disclosure (CARD) Act was signed into law in May 2009 to change a number of practices.
The CARD Act made a lot of changes in how credit card issuers do business with students. One of the biggest changes was requiring students to be able to demonstrate an ability to pay. If you are under 21 and do not have sufficient income (a campus job, for example), you would need to get a co-signer.
In addition, colleges must now limit the amount of credit card marketing on campus. The days of free t-shirts and pizzas in exchange for credit card applications are gone. But that doesnâ€™t mean it is impossible for a college student to get a credit card. Some highly reputable banks and credit unions still offer student cards. And building a good credit score while still in college is still highly recommended.
When used properly, credit cards are a very convenient method of repayment. However, when not used properly, you can end up deep in credit card debt. It is important to establish a healthy relationship to credit now, with your first credit card.
You should try to ensure that you pay off your credit card bill in full and on time every month. Ideally, you should set up an automatic monthly payment. And to keep yourself on track, take advantage of alerts offered by most credit card companies. You can even get daily text messages reminding you of your balance.
If all of this sounds confusing, donâ€™t worry. Thereâ€™s actually a way you can automate your payments so you never even have to bother with the hassle of using a credit card. All it takes is a few minutes of upfront work.
First, youâ€™ll need at least one recurring monthly bill of the same amount, such as Netflix or Spotify. Log in to your account and set up an automatic payment each month using your credit card. Make a note of how much your monthly bill costs.
Next, log in to your bank account. Set up a second automatic payment to go to your credit card each month for the same amount as the bill. If your bank doesnâ€™t offer the option to set up automatic payments, you may also be able to set up your credit card to automatically withdraw the amount of the bill from your bank.
Because you know this bill will be for the same amount each month (barring any price increases), you can literally just leave this running in the background each month on autopilot. You donâ€™t even have to carry your credit card in your wallet if you donâ€™t want to. Then, when you graduate, youâ€™ll automatically have an improved credit score!
Congratulations! Youâ€™ve made it to the finish line. But what about your student credit card? You may choose to hold on to your student card since it might be your oldest credit account and this can play a part in your credit score. If you close your student credit card account, it will reduce your average age of credit accounts and could hurt your credit score. Instead of closing the account, you can ask your student card issuer if there is an option to upgrade your card.
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