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Student Credit Cards 101

Being a new college student guarantees one thing in your life: change. You may be living away from your family for the first time, and you have more control over your own finances than ever before. This additional responsibility, on top of all the new pressures of college, may seem a little frightening. And it should.

At CreditCardsClients.com, we understand that credit cards can be a challenge for first time users, so we have advice on how to choose, manage, and enjoy a credit card – without getting into too much trouble.

A credit card lets you make purchases by borrowing money from the company or bank which issued the card. Here’s how it works:

When you go to a store to buy a new CD, you swipe your credit card and sign the receipt. The credit card company pays for the CD for you, but because you signed the receipt, you’ve agreed to pay back the credit card company at least that amount, plus any appropriate charges.

Every month, the credit card company sends you a bill called a statement, showing the total amount of money you’ve spent on your credit card. You are responsible for paying them back, either in full or in increments over time.

Similar to credit cards are charge cards and debit cards, but they differ in a very important way. When you use a charge card, you get a monthly statement like that of a credit card, but you must pay the whole balance each month. If you bought the CD using a debit card, the money would be automatically withdrawn from your checking account within a day or two and paid directly to the store.

That's why a credit card is such a valuable tool: it allows a buyer to pay for purchases over time, rather than paying in full at the time of purchase or at the end of the month.

Suppose you are moving into your new apartment but lack the funds for all the basics. Without a credit card, you would have to save up money over time, and buy what you need only once you’ve accumulated the whole amount. However, with a credit card, you are able to buy everything necessary right away, and pay for it a little each month as you can afford it.

It's important to realize that when you pay for your purchases over time, you are required to pay an extra percentage of this price as interest. Also, beware that missing payments will result in late fees, fines, and higher interest charges.

Even if you plan to make only smaller purchases and don't need to stretch out your payments, using a credit card has a benefit: it helps build your credit rating. This is a score assigned to every individual that describes the likelihood that he or she will pay back the money borrowed. A good credit rating will be crucial in the near future, if you need to take out another student loan, or make a large purchase such as a car.

By starting to use a credit card responsibly while you are young, you can begin to build up a solid credit payment history and increase your credit rating. (See our article on credit history.) If you have a strong credit rating, the interest rates that will come with your new loans will be lower than if you had a poor credit rating, and that will save you money.

Some lenders may not even lend you the money if your credit rating is poor – but surprisingly, having no credit history may be a hindrance too. You have to prove that you’re a good risk. That’s why it’s important to start building good credit while you’re eligible for student credit cards.

Finally, you can earn rewards on purchases made with your credit card. Special cards can earn you cash rebates, airline miles, gasoline, donations to charity, or points redeemable for gifts, just for making purchases with the card. Check out our rewards calculator to find the best reward student card for you.

Now, there are three important things to remember when choosing and using a credit card.

1) Compare Card Offers. Look at the advantages each card brings to the table and the costs that they entail. Some cards benefit certain students more than others, so it is important to find the card that is right for you. Check out the terms and conditions and the different rewards to find the card that fits you best.

2) Always pay your credit card bill promptly. The credit card company gives you some time before you have to reimburse them, but be careful: it is easy to forget about paying on time, and if you miss the due date you can be charged with late fees and higher interest rates.

3) Always pay your bill in full if you can! If you do, you won’t be charged interest that month, and will effectively save money. If you can't pay it off, pay as much as you can, to minimize the next month's interest. Don't just pay the minimum required payment unless you're strapped for cash that month.

Now that you've graduated from Student Credit Cards 101, you're more prepared to handle the risks and to enjoy the great benefits of having a student credit card. Good luck!

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Latest Updates

Citi® Diamond Preferred®
APR for purchases was lowered to 8.49%

Citi® Platinum Select® Card
APR for purchases was lowered to 8.49%%

Blue from American Express®
APR for purchases is as low as 11.49%

Blue Cash® from American Express®
APR for purchases is as low as 12.49%

Blue Sky from American Express®
APR for purchases is as low as 12.49%

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from A Smart Debt Solution by Nancy Colasurdo for

"based on my profile, I was told to expect to save about $900 over one year and $1,500 over two. Not bad!"

"Savings Agent is a free tool that compares dozens of cards to find you the one with the lowest cost... It's a good first step toward negotiating your new interest rate."

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"save thousands with a new credit card"

"...what I'm about to tell you will sound too good to be true."

from A Smart Debt Solution by Nancy Colasurdo for

"based on my profile, I was told to expect to save about $900 over one year and $1,500 over two. Not bad!"

"Savings Agent is a free tool that compares dozens of cards to find you the one with the lowest cost... It's a good first step toward negotiating your new interest rate."

"For small-business owners looking for a quick and easy way to find money-saving credit card offers"

"Want to pay less to your credit card company? Click on the "Savings Agent" tool at creditcardclients.com, ...and the website finds the card with the best terms for you!"

"save thousands with a new credit card"

"...what I'm about to tell you will sound too good to be true."

from A Smart Debt Solution by Nancy Colasurdo for

"based on my profile, I was told to expect to save about $900 over one year and $1,500 over two. Not bad!"

"Savings Agent is a free tool that compares dozens of cards to find you the one with the lowest cost... It's a good first step toward negotiating your new interest rate."

"For small-business owners looking for a quick and easy way to find money-saving credit card offers"

"Want to pay less to your credit card company? Click on the "Savings Agent" tool at creditcardclients.com, ...and the website finds the card with the best terms for you!"

"save thousands with a new credit card"

"...what I'm about to tell you will sound too good to be true."

from A Smart Debt Solution by Nancy Colasurdo for

"based on my profile, I was told to expect to save about $900 over one year and $1,500 over two. Not bad!"

"Savings Agent is a free tool that compares dozens of cards to find you the one with the lowest cost... It's a good first step toward negotiating your new interest rate."

"For small-business owners looking for a quick and easy way to find money-saving credit card offers"

"Want to pay less to your credit card company? Click on the "Savings Agent" tool at creditcardclients.com, ...and the website finds the card with the best terms for you!"

"save thousands with a new credit card"

"...what I'm about to tell you will sound too good to be true."

from A Smart Debt Solution by Nancy Colasurdo for

"based on my profile, I was told to expect to save about $900 over one year and $1,500 over two. Not bad!"

"Savings Agent is a free tool that compares dozens of cards to find you the one with the lowest cost... It's a good first step toward negotiating your new interest rate."

"For small-business owners looking for a quick and easy way to find money-saving credit card offers"

"Want to pay less to your credit card company? Click on the "Savings Agent" tool at creditcardclients.com, ...and the website finds the card with the best terms for you!"

"save thousands with a new credit card"

"...what I'm about to tell you will sound too good to be true."

from A Smart Debt Solution by Nancy Colasurdo for

"based on my profile, I was told to expect to save about $900 over one year and $1,500 over two. Not bad!"

"Savings Agent is a free tool that compares dozens of cards to find you the one with the lowest cost... It's a good first step toward negotiating your new interest rate."

"For small-business owners looking for a quick and easy way to find money-saving credit card offers"

"Want to pay less to your credit card company? Click on the "Savings Agent" tool at creditcardclients.com, ...and the website finds the card with the best terms for you!"

"save thousands with a new credit card"

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