Getting a credit card can be an important step in building your financial foundation. A few years of using credit cards properly may give you good enough of a credit history to take out a mortgage.
Responsibly using a starter card will also allow you to upgrade to credit cards which offer more rewards and perks. Keep reading to learn what questions you should ask before you get a credit card and to see our picks for the best first credit cards for students.
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Are You Ready To Get A Credit Card?
Simply being an adult doesn’t necessarily mean you’re ready to get a credit card. Before you get a card, here are a few questions you may want to ask yourself.
Do I Have A Way To Pay Off The Card?
Credit cards aren’t free money. They need to be paid off. And with average interest rates at nearly 15%, it's ideal to pay them off in full each month. That means every expense you put onto the card needs to be paid off before interest accrues.
Paying off a credit card requires money. To get money, you need a job or a business that produces income. No job? Start a side hustle before you take on a credit card. You don’t want to tempt yourself to spend money you can't repay.
Will I Be Tempted To Overspend?
It can be tempting to use a credit card as a license to spend money. But if you overspend on a credit card, it may take years to dig out of the debt. And parents don't always have the financial means (or desire) to help their children dig out of a hole that they made through irresponsible money management.
If you don’t trust yourself with a credit card, don’t get one. As you gain more experience with money management, you’ll develop skills that will keep you from overspending. Wait a few years if you don’t trust yourself today.
Do I Understand Credit Scores?
As a college student, you can’t expect to qualify for the best credit card offers. You're unlikely to rack up massive signup bonuses or take free trips to Bali. That just doesn’t typically happen right away. The point of your first credit card is to help you build your credit score.
Your credit score is a measure of how a bank views your creditworthiness. The higher your score, the more likely it is that a bank will lend you money. When you have no open lines of credit, you have no credit score.
After opening your first credit card, you’ll have a credit score. You must make good credit decisions with your first card. That means you need to pay your credit card bill ON TIME every month.
You’ll want to keep your credit utilization below 30% at all times. If your credit limit is $500, keep the total spending on the card to less than $150. You don’t have to pay interest to boost your score. Good credit behavior will raise your credit score over time.
Tips For Finding Your First Credit Card
Finding the best first credit card for students can be a real challenge. When you don’t have any credit open, you have no credit. That often means you’re invisible to a bank.
Without a credit history, it's difficult for banks to judge whether you’re a good credit risk. But here are a few tips to help you find your first card.
Apply While You're In College
Credit issuers love developing a relationship with students while they're in college because they have a long credit history ahead of them. Also, if students get over their head in debt, their parents are often willing to help them out.
For these reasons, several credit cards are specifically targeted at college students. The credit card companies who offer these cards know that the majority of their applicants aren't going to have a long credit history and they're OK with that.
If you're currently enrolled in a post-secondary program, you may have a much easier time qualifying for a college card than you would for a standard unsecured card after you graduate. Just know that you won't be able to apply without a cosigner unless you're able to verify that you have income.
Ask A Parent To Make You An Authorized User
Very few credit cards have options for cosigners. But if your parents have good credit habits, they may be able to make you an authorized user on their credit card.
When you become an authorized user, you inherit your parent’s good behavior on your credit report. This is a good hack but it can backfire if your parents have poor credit or become unable to pay their bills.
Look For Secured Credit Cards
A secured credit card is a credit card backed by a cash deposit. These cards often have low credit limits, but they reduce the bank’s risk if you default. Look for a secured card with a “graduation” program where the deposit is returned after a year of on-time payments.
Don’t Expect Massive Rewards At First
Your first credit card is all about establishing credit. This can take anywhere from a year and a half to three or more years depending on how often you use the card.
Until you have a good credit score, don’t bother applying for credit cards with big sign-up bonuses or high rewards. A 1% to 3% rewards rate is just fine while you’re getting started.
Best First Credit Cards For Students
Your first credit card isn’t going to be a flashy credit card with a big signup bonus. However, they can help you build credit quickly. One of the recommended cards is a secured credit card which means it requires a refundable deposit to guarantee the amount you borrow.
Deserve® EDU Mastercard For Students
The Deserve® EDU Mastercard for Students is an unsecured credit card that carries no annual fee and doesn’t require an upfront security deposit. International students who don’t have a Social Security Number can still apply for the card.
The Deserve® EDU Mastercard includes one year of Prime Student for free, 1% back on all purchases, and no international transaction fees. Plus, you'll get cell phone protection of up to $600 that can be claimed in the event that your phone is lost or stolen.
Bank Of America Cash Rewards Credit Card For Students
The Bank of America Cash Rewards Credit Card for Students offers an impressive level of rewards that rivals even many standard credit cards.
Cardholders earn 3% cash back on the category of their choice, 2% back at grocery stores and wholesale clubs, and 1% back on all other purchases.
Other benefits of this card include it's $0 annual and it's 0% APR for 12 billing periods. Also, students who spend at least $1,000 in purchases within their 90 days with the card will earn a $200 cash rewards bonus.
Wells Fargo Cash Back College Card
The Wells Fargo Cash Back College Card pays 3% cash back at gas stations, grocery stores, and drugstores. All other purchases earn 1%.
In addition to cash redemption, rewards can be redeemed for travel, gift cards, merchandise, and more. And, like the other cards on this list, the Wells Fargo Cash Back College Card doesn't charge an annual fee.
Journey Student Credit Card From Capital One
The Journey Student Credit Card from Capital One charges no annual fee and pays 1% cash back on all purchases.
If you make your monthly payments on time, the cash back percentage bumps up to 1.25%. On-time payers also you'll receive a $60 streaming subscription credit ($5 per month).
Capital One also promises to begin considering accounts for credit limit increases in as little as 6 months. That's helpful because a higher credit limit automatically leads to a lower credit utilization rate as long as your spending stays the same.
Capital One Secured Mastercard
The Secured Mastercard from Capital One could be a great first credit card for high school students. It requires a minimum refundable deposit of $49, $99 or $200.
Regardless of the deposit that you set, your initial credit limit will be $200. So it's possible to get approved for a partially secured version of this card right off the bat.
You won't be charged an annual fee while owning the Capital One Secured Mastercard, but you won't earn any rewards either. As it does with the Journey Student Credit Card, Capital One says that it automatically reviews Secured Mastercard accounts for a credit limit increase as early as 6 months after card approval.
Final Thoughts
The first credit card for students usually isn't as exciting as some of the most popular travel cards or mainstream cash back cards. But an unassuming start can help you improve your credit and develop a strong financial foundation.
It's important to understand the dangers of credit cards, especially how they can lead to overspending and debt cycles. But if you’re conscientious with your first credit card, you'll build positive credit history. And that could help you qualify for the best rates on mortgages, car loans, or other forms of financing, down the road.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.