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Student Credit Card – Definitive Guide To Success

You don’t want to jump into bed with the first student credit card that falls in your lap. Before committing to your student credit card, you need to do some due diligence and make sure that the card doesn’t have any crazy terms. Most importantly, you want a college student credit card that you aren’t embarrassed to be seen with around your friends.

One that is there to support you when the going gets tough, and one that Mom and Dad would approve.

how do college student credit cards workhow do college student credit cards work

Finally having the legal power to make your own financial decisions was one of the most liberating moments of my life but at the same time, it was also downright scary. Deciding which student credit card, you are going to ride or die with is a huge responsibility that I am going to properly prepare you for by thoroughly explaining everything you need to know about  your first credit card in this article. We will discuss the 22 most important questions you need to be able to answer about your future Mr. or Mrs. Student Credit Card.

How Do Credit Cards Work?

Have you ever wondered how a credit card actually works? 

I mean, what does that black strip on the back of the credit card actually do?

Or, what about the new square ‘chip’ that we now slide into the front of the credit card machine.

What actually happens when we slide our card through the card reader?

When you make a purchase using your credit card, the merchant uses the embedded information on your credit card to access your revolving loan with your credit card company. 

The credit card lender extends you credit up to your set credit limit and pays the merchant on your behalf. 

Every billing cycle you receive an invoice for the credit you used that month and any balance that you did not pay from the previous month.  

With revolving loans such as credit cards, you may pay the entire balance each month or as little as the minimum monthly payment. So long as you do not exceed your credit limit and you make your minimum monthly payments, you will stay in good standing with your credit card lender. However, if you are interested in building your credit, it is recommended that you do not leave a balance of more than 20% on your revolving credit loans. We have written an article specifically entitled ‘How Do Credit Cards Work?‘ if you’d like to learn more.

How Old Do You Have To Be To Get A Credit Card?

You must be 18 years old to open a credit card account in your own name. You cannot open a credit card account prior to the age of 18 because in the U.S., you cannot legally enter into a binding contract before your 18th birthday.

How old do you have to be to get a college student credit card_How old do you have to be to get a college student credit card_

Therefore, if a credit card company gave you your credit card before your 18th birthday, you could legally walk away from any of the balance owed on the credit card because you were not old enough to enter into a legally binding contract. HOWEVER, all is not lost…there is still a way for you to get a credit card if you are under 18…

Your parents, grandparents, aunts, uncles, cousins or friends, can add you to their credit card account as an authorized user. All they would need to do is contact their credit card company and ask to add you to their credit card account. You would receive a credit card in your name and be able to use it at the agreed upon discretion. I understand that if you are under 18, right at this moment, you are frantically racking your brain trying to think of a good reason you can use for someone in your family to add you to their credit card as an authorized user… Relax. I got you!

Here’s what you say to convince them to add you as an authorized user and get your very own credit card. Hopefully, they will end up paying your charges, so long as you don’t abuse it, do well in school and do some occasional dishes without being asked. Are you ready?Here’s what you say…. tell them that you were reading online about how important it is to establish credit at a young age. And the easiest way for someone under 18 to establish credit is by their family putting them on one of their credit cards as an authorized user.Hand them your phone and asked them to call the credit card company right now because you don’t want to have poor credit when you turn 18. They can be of significant help to your future, and you will never forget them for it! Don’t say I never did anything for you! (wink)

Strategic Tip

Asking a family member to add you as an authorized user to their credit card is not something many adults have thought about. It is a considerable risk because they will be responsible for every dollar you charge. So when you approach them about putting you on their credit card: Be Responsible, Be Patient and Be Deserving!

What Are College Student Credit Cards?

Student credit cards are very similar to regular credit cards except they usually have lower credit limits and higher APR % rates. The credit card companies will include credit education, tools and better access to resources that someone new to adulting, like a college student, may need. If the credit card offers some rewards, they will be tailored towards college students needs and may include incentives for repeated on-time payments and I know of one student credit card that rewards its users for good grades.

what are college student credit cardswhat are college student credit cards

Do I Need A Cosigner For A Student Credit Card?

If you have Bad Credit, No Credit, New to Credit, Poor Credit, or looking to Build Credit, the credit card companies may see you as too big of a risk to extend you credit.Another ward, if you can’t demonstrate the ability to show you have regular and reliable income or have some credit payment history, you may not qualify for a college student credit card. If this is the case, you may need to speak to someone to be the cosigner on a credit card for you.

College Student Credit Card CosignerCollege Student Credit Card Cosigner

I think it is good to recognize what a huge request you are making and realize that a cosigner will be responsible for your credit card payments if you fail to make them. Because of this risk, asking someone to be your cosigner is typically something a college student asks of their parents or a close family member. If you find someone to cosign for a credit card, you will be the primary card holder, and they will be the cosigner on the account. The monthly bills will be sent to you, and you will be responsible for paying them on time. If you fail to pay your credit card on time, they will contact the cosigner and request payment from them. If neither of you makes the payment on time, they can report a late payment against both of your credit histories to the three major credit bureaus. But, in reality, you, may not even have the option to get a cosigner for your student credit card. After the U.S. government passed the 2009 Credit Card Act, credit card companies started to stop allowing cosigners for credit cards.

Presently, very few of the big credit card companies will even allow you to get a cosigner for their credit cards. 

Only, U.S. Bank, Wells Fargo, and Bank of America will allow for credit card cosigners.  

With, American Express, Citi, Capital One, Discover, and Chase, not accepting credit card cosigners.  

But all is not lost… 

There are two solid alternatives you can look into if you cannot get a credit card with a cosigner.  

Knock Knock

If you fail to make your credit card payments on-time, a negative report will be sent to the big three credit bureaus which will hurt your payment credit history AND THE COSIGNERS!

First – Authorized User of a Credit Card

If the credit card company would not allow you to have a cosigner or you couldn’t’ find one, you may be able to get a credit card by being made an authorized user of a family or friends credit card. They would need to contact their credit card company and add you to their account by giving them your social security number and date of birth. For you, this is an excellent opportunity. Because you will get a credit card in your name and the credit card company will report the credit card information to the three major credit bureaus which will help build your credit.

Word of caution, be sure that the person you asked to put you on their credit card account makes all their payments on-time.  

If they make late payments on their account and you are an authorized user, the CC companies will report the negative credit history to your account at the big three credit bureaus, also.  

This negative credit payment history will make your credit score go down and can stay on your record for up to seven years. 

Caution Credit KnocksCaution Credit Knocks

Another important conversation you will need to have with the credit card owner is how much of a balance they generally leave on their credit card each month.

Anything over 30% of the total monthly balance may affect your credit negatively.

Did You Know? 

There is another option if you cannot find someone to make you an authorized user on their credit card. 

Tradeline Supply Company will help match you to the best credit card authorized user options. 

If you have found someone that has agreed to add you to their credit card as an authorized user, ask them to add you to their credit card the one that is the oldest. Asking for them to put you on a credit card with a big credit limit would also help you build credit faster but might raise red flags as the person may think you are looking to charge as much as possible to their credit card. My advice would be to go for their oldest credit card and if you go for one with a larger credit limit, tread lightly and explain that the more available credit you can show on your credit history the better for your credit building…

Second – Secured Credit Card

If you have Bad Credit, No Credit, New to Credit, Poor Credit, or looking to Build Credit, the secured credit card was designed just for you! That’s right; you are not alone; you are so not alone that there is a credit card that was made for you! Secured credit cards work just like regular credit cards except you send the credit card company a deposit which usually becomes your credit limit amount. For example, you sign up for a secured credit card and decide on a $200 credit limit and deposit. You send the credit card company $200, and they send you a credit card with a credit limit of $200. It is a very low risk for the credit card company because if you don’t make your payments, they take their payment from your deposit. What is nice about it for you is that you instantly start building credit! The credit card company will report your available credit and your payment history every month to Experian, Equifax, and TransUnion (the big three credit bureaus). So long as you make your payments on time and pay the majority of your balance each month, you will qualify for a student credit card in no time (OK, not literally, you’ll have to do a few other things that Credit Knocks covers ad nauseum all over this site but maybe in 6 months to 12 months ).

 Are There Laws To Protect Students From Predatory Marketing?

Before the 2009 Credit Card Act, the U.S. did not have many consumer protection laws governing the credit card industry. Back in my day… when you walked into the student center that first week of college, you were met with booths of credit card companies offering you free pizza, frisbees, clothes, notebooks, beer cozies and lots and lots of pens. All you had to do was sign up for their student credit card, and bounties of free goodies were yours.

2009 Credit Card Act Credit Knocks2009 Credit Card Act Credit Knocks

Or, you would receive multiple pre-approved credit card offers in your college PO box, all you had to do was put your name, address, social and put the card back in the prepaid envelope back to the credit card company.  

It was a great time of free money and no worries… until the bill showed up the next month and you had no job or money to pay it.  

Today, that circus no longer exists on college campuses because of the 2009 Card Act.  

One of the goals of the Card Act was to make it more difficult to market to college students and people of that age.  

After the Act went into effect, credit card companies could no longer qualify people under the age of 21 for a credit card without a cosigner or proof of independent income.  

And, they were no longer able to mail anyone under the age of 21 a pre-approved credit card offer. 

It is estimated that the 2009 Credit Card Act has saved U.S. consumers multiple billions of dollars in fees.

Why is Building Credit Important To Students? 

There are a lot of advantages to building your credit as a college student or when you are still young. Building a strong credit score takes years, and the sooner you start, the higher it can be. Putting off starting to build your credit until after college can be detrimental to your future. I recently added my 15-year-old son as an authorized user to one of my credit card accounts. This is a great first step for a college student or even a high school student to ask their parent to do. Look into a college student credit card but remember you will need a cosigner or you have an independent income.

People with Bad Credit, No Credit, New to Credit, Poor Credit, or looking to Build Credit, usually start with a secured credit card that requires you to make a deposit of $50 to $200 as a condition of approval.  

credit builder loan by Self Lender is an excellent way to start building your credit by having monthly installment loan payments reported to the big three credit bureaus with no credit check.  

Not only is it good to start new credit lines but it is good to get into the habit of paying bills on time and getting familiar with different types of invoices.  

Another great benefit of starting to build your credit when you are a young college student is that you will have the opportunity to learn about credit monitoring and your credit score.  

The better your credit score, the more you can leverage your finances, so starting as soon as possible makes a lot of sense.  

Time is Ticking

Start building your credit NOW! After graduating if you do not have a solid credit score, you will have trouble renting an apartment or even qualifying for a new cell phone! 

What Are The Negatives Of Not Having Credit? 

Imagine that your life was one big party (I realize this probably isn’t a hard scenario to imagine) and at this party, everyone knows everyone…except, they don’t know you.  

In fact, the deeper you get into the party, you realize that this is a private party, and no one wants to talk to you or even acknowledge you exist (again, I realize this scenario is probably not hard to imagine…lol).  

Welcome to what it is like having no credit in the U.S. 

It sucks, its embarrassing, its uncomfortable, and it limits your opportunities.  

No Credit Big Problem Credit KnocksNo Credit Big Problem Credit Knocks

Frankly, without credit, you will have a difficult time getting a credit card, a cell phone, an auto loan or even renting an apartment without a cosigner. But never fear, Credit Knocks is here! There are plenty of opportunities for you to build your credit that are explicitly designed for people with Bad Credit, No Credit, New to Credit, Poor Credit, or looking to Build Credit.

The best options that you should consider to start building your credit would include:

How Can College Students Build Credit? 

The easiest way for college students to build credit is to start with the Credit Knocks 90 Day Credit Sprint plan. 

 There are multiple credit building tools that you can use to start improving your credit. 

Most of the tools Credit Builder suggests you start with have no credit check and will report your monthly payments to the big three credit bureaus. 


Credit Builder Loan by Self Lender

Authorized User on credit card

Store/Catalog Card

Rent Reporting


Student Credit Card

Secured Credit Card

Should College Students Get A Credit Card?

Deciding to get a credit card as a college student can cause you problems for many years if you are not properly prepared for the responsibility.

A credit card is not extra money you have to spend. 

It is a tool for you to use as a matter of convenience that you will need to plan on paying off each month. To get a credit card, you need to have your independent income or a cosigner who is willing to help you pay your monthly credit card bills.If you do not qualify for a student credit card, a secured credit card or store catalog card may be an easier to be approved option.

Who Can Apply For A College Student Credit Card? 

If you are applying for a college student credit card you will need to be enrolled in school.  

You will need to read the fine print on your student credit card application but generally the requirements are: 

  • Over the age of 18 
  • Must have independent income or a cosigner 
  • Enrolled in school  

The credit card companies do not usually limit the card offerings to specific types of education.  

For instance, if you are enrolled in a technical school or trade school, you would still qualify for a student credit card, they are not just for college students at more traditional universities or colleges.  

Can I Qualify For A Student Credit Card With No Credit? 

When credit card companies evaluate the risk factor of giving you a credit card, they look at your credit history. Qualifying for a student credit card with no credit is possible if you choose one that is explicitly targeting students with no credit. If you have no credit history, they cannot accurately access the risk of giving you credit, and therefore the cards targeting people with a fair or better credit score will probably decline your application. However, there is a Secured Credit Card that is available for people with Bad Credit, No Credit, New to Credit, Poor Credit, or looking to Build Credit. To qualify for the secured credit card, you send a deposit to the credit card company, and they will send you a card with a low maximum limit, usually the amount that you sent them for the deposit. A great credit builder tool option other than a credit card is the Credit Builder Loan by Self Lender with no credit check and monthly payment reporting to the big three credit bureaus.

Strategic Tip

A student credit card may not be your best first option to start building your credit. Check out Credit Builder Loans and Secured Credit Cards to see if those tools would be a better fit for you. 

What Are The Types Of College Student Credit Cards?

All credit cards are a revolving loan with a maximum credit limit extended to the credit card holder aka borrower.  

Typically, most credit cards are put into three categories: 

Secured Credit Card

A secured credit card requires you to give the credit card company a deposit for you to qualify for their card. These credit cards are the easiest to qualify because of the low risk and credit limit and are best or people who have Bad Credit, No Credit, New to Credit, Poor Credit, or looking to Build Credit.  

Student Credit Card  

These credit cards are for people 18 years and older who are in school and have independent income or a cosigner. They do not require a deposit, like Secured Credit Cards, but tend to have lower credit limits and higher APR %s. If you have limited credit to fair credit, you may qualify for a student credit card.  

Credit Card

The traditional credit card targeted for people with fair, good or an excellent credit score. These cards are the most difficult to qualify for because they are not looking for people with Bad Credit, No Credit, New to Credit, Poor Credit, or looking to Build Credit. 

However, in addition to these three types of credit cards, some offer different types of incentives.  

There are multiple types of incentives a credit card company may offer based on their targeted customers.  

With student credit cards, their incentive offers are tailored for college students.  

We’ve broken down the list of types of incentives offered into four categories for student credit cards:  

Cash Back Rewards – Some credit cards offer cash back rewards on many of the categories below. If you regularly shop at any of these business types, you should consider choosing a student credit card that rewards you for doing what you already do.   

  • Grocery 
  • Gas 
  • History of on-time payments 
  • Good grades 
  • Restaurants 
  • Drug stores 
  • Auto/Renter’s Insurance 

Travel Rewards – Some people know they will be traveling a lot for school and may choose a credit card with that gives them travel rewards. 

Introductory Low APR (for a specified time period) – You may not see a lot of value in any of the rewards programs and choose a card with an extremely low APR % rate to save you money in interest payments.  

No foreign Fees (for credit card use outside of the country) – While some college students know they will be traveling abroad for school or play and will want to choose a credit card that doesn’t charge them an extra fee for using the card in foreign lands.  

Knowing the rewards that your student credit card offers can help you in narrowing down which credit card is best for you.  

How To Choose A College Student Credit Card?

Choosing a student credit card can be a tricky wicket.  

There are multiple factors you must look into before choosing the student credit card you will ride or die with.  

First – Will You Qualify 

Depending on the student credit card you choose, each has a targeted credit score range that you must be within to be accepted.  

Do your research on the cards you are interested in and make sure that if the card is targeting people with fair credit that you have at least a 630-credit score.  

Second – Annual Fee

Some student credit cards will have an annual fee you pay for the privilege of having that credit card.  

The annual fees can range from $0 to $500 a year regardless of whether you use the credit card or not.  

Typical credit cards will charge annual fees from $0 to $99, and if they are charging more than $99, I’d look really closely to see what else the card offers.  

Some credit cards offer cash back rewards, low APR %’s and waive fees that maybe aren’t traditionally waived.  

You will need to look closely at the fine print to better understand the reason for the annual fee.  

Third – APR Percentage 

The cost you will pay for borrowing money from the lender is called interest.  

APR stands for Annual Percentage Rate which is the actual amount of money you are paying the credit card company expressed as an interest rate that includes all of your costs and fees.  

This is really a handy number because you can compare APR rates to other credit cards and objectively make a good decision on which student credit card to choose because everyone is using the same formula.  

If student card A has an APR of 15% and student card B has an APR of 22%, we know that you will spend more money in interest and expected fees if you choose student card B.  

However, the APR does not include annual fees, balance transfers, cash advances, or late payments in its calculation.  

Many of these fees the credit card companies can not anticipate and therefore do not include them in the APR. 

Helpful Tip

Don’t be fooled by the allure of the student credit card rewards programs. Many people make their decision solely on what rewards programs are offered. The credit card companies know this! The most popular rewards programs often times have the highest annual fees and APR rates.

Fourth – Balance Transfer Fees, Cash Advance Fees, Late Payment Fees, Grace Periods and the (Fine Print)

Look, let’s be honest here, what are you really going to be using this credit card for? 

Some Balance Transfer fees can be as much as $100, and if you are transferring relatively small amounts of money, it may be better off for you to pay the higher APR % then to transfer the balance at all.  

‘To Know Thyself Is The Beginning Of Wisdom’


Know the fees for cash advances if you are in the market for a for cash advances because times are tight and you may need some quick cash or, maybe, you are an insane psycho who just likes paying extremely high APR % rates on credit cards.  

Being honest with yourself and the reason you are looking to add the new credit card into your credit mix will help you make the best decision on which new student credit card will be best for you. 

Lastly, if you are prone to pay your credit card payments late, look for a credit card that doesn’t charge extremely high late fees and one that has bigger grace periods before they consider the payment late.  

Fifth – Rewards Programs

Most credit cards offer some sort of rewards program.  

You may get cash back if you dine or shop at certain places.  

Or, there may be a special on a low APR % rate that you want to take advantage of for some balance transfers from higher APR % credit cards.  

Some credit cards offer frequent flier miles that can be redeemed for airplane tickets for you and your family.  

A lot of people will choose a student credit card based on the rewards programs.  

The credit card companies know this and will try and make a larger profit on the most popular rewards programs by charging higher annual fees and APR rates.  

Buyer beware…. 

How Many Credit Cards Should A College Student Have?  

You think I am going just to say that a college student should only have ONE credit card, don’t you?  

Admit it… come on, admit it. 

But I am not!   

In fact, I’m going to give you a couple of really sound reasons you can recite back to the parental units or other people in your circle, giving you shade for all those credit cards.  

How Many Credit Cards... Does A College Student NeedHow Many Credit Cards... Does A College Student Need

I also am going to help you win the argument the next time the number of credit cards you have or want becomes a thing.  

Disclaimer… I am assuming you are responsibly paying your credit card(s) on-time and are paying off the entire or at least 80% of the monthly balance.  

If you are making your payments every month and are paying off most of the balance, I don’t see why you can’t have a couple of credit cards.  

Let’s spill the tea… 

There’s a lot of advantages for a college student to have multiple credit cards.  

First…You will have more credit available. So long as you do not charge your credit cards to the limit and not pay off the balance, this will help build your credit score.  

Thirty percent of your FICO credit score is based on the amount of credit you use in relation to your available credit every month.  

If you pay off your credit cards every month or do not leave more any more than 30% of the balance on your credit cards than this will help your credit score.  

As an example, if you had a credit card with a credit limit of $1,000 and you maxed it out during the billing cycle.  

When the bill came, how much of the balance of $1,000 would you need to pay for it to not negatively affect your credit?  

If you thought that you needed to pay $700 of the balance so that you would have a balance of no more than 30%, then you are correct.  

If you thought anything else than you were wrong and may really struggle with this next concept.  

A reason having multiple credit cards can be beneficial is that you get to add up all of the maximum credit limits on your credit card to get one number that FICO calls your available credit limit.  

Your available credit is all of your credit cards maximum credit limits added all together.


Let’s imagine that you have three credit cards; Credit Card A has a maximum credit limit of $200, Credit Card B has a maximum credit limit of $1,300 and Credit Card C has a maximum credit limit of $500.  

What is your total available credit?  

All you have to do is add up the three maximum credit limits to get an available credit of $2,000.  

Knowing that you have available credit of 2K, how much of a balance can you leave on your credit cards each billing cycle without your credit debt affecting your credit score negatively? 

If you multiply $2,000 by 30%, you will get $600.  

That means that you cannot leave more than $600 combined on your credit card balance each month.  

It doesn’t matter if the $600 is all on one credit card or spread out over all three, the credit bureaus will add up the total credit available to figure out your debt to available credit percentage.  

So by you getting a couple of extra credit cards, you are able to increase your available credit and potentially, carry a larger balance without a negative credit score effect.  

Second… FICO will track all of your credit history and the more accounts, sometimes also referred to as credit mix, you have the better for your credit score.  

The three big credit bureaus will track all of those payments to the different accounts and, if you pay on time and keep your balances low, it will help build your credit.  

Last… Don’t forget in life, shit happens. Sometimes you leave a credit card at the bar because you forgot to close out your tab.  

Sometimes you try to use it to open a door and, it gets all F’d up and won’t work anymore.  

And the worst-case scenario is when you lose your wallet or purse and have to replace all of your different cards and ID’s.  

I can say from experience, replacing a credit card is really simple, you call the credit card company and ask them to turn off your card.  

They then send you a new one in a couple of days. 

However, replacing those driver’s licenses is an absolute nightmare… sorry if you are in this situation.  

But, when you do lose a credit card, what would you do if you only had one? You couldn’t use it and what if there was an emergency like you were pulling an all-nighter studying for that Art 101 final that you have procrastinated until the very last minute and suddenly you realize you cannot go on without pizza. And you have no credit card to pay for the pizza, and you are cash poor until Friday. You’d fail your final, and then your parents or the school may decide that you should not attend college anymore. Now, you are just a college drop out with no art appreciation. All because you didn’t have a backup credit card. See, it makes a lot of sense to have an extra credit card or two, be responsible and only charge what you can afford.

Knock Knock

Did you know? 

Help build your credit score by keeping your student credit card balances less than 30% of your total available credit. Don’t use your credit card if you can’t afford to payoff most of the balance each month.

But, when you do lose a credit card, what would you do if you only had one? You couldn’t use it and what if there was an emergency like you were pulling an all-nighter studying for that Art 101 final that you have procrastinated until the very last minute and suddenly you realize you cannot go on without pizza. And you have no credit card to pay for the pizza, and you are cash poor until Friday. You’d fail your final, and then your parents or the school may decide that you should not attend college anymore. Now, you are just a college drop out with no art appreciation. All because you didn’t have a backup credit card. See, it makes a lot of sense to have an extra credit card or two, be responsible and only charge what you can afford.

How To Report Income On Your Credit Card Application?

I think the question you are trying to really ask is…’What is income?’ 

That can be a difficult question because the credit card companies don’t do a great job of defining it usually.  

You are in a position of confusion and don’t want to misreport or state your income but, you want to get credit for every dollar you hustle.  

When you report your income on your credit application, you should use the total monthly amount that you independently earn.  

It could be a crime to fraudulently report more income than you actually earn 

Don’t put yourself in a possible bad situation and overstate or lie about your income on a credit card application.  

They do a good job of assessing their risk, and if you have to lie about your income, you probably can’t afford the credit card.  

Reporting Income On Credit Card Application Credit KNocksReporting Income On Credit Card Application Credit KNocks

How To Build Credit With Your First Credit Card? 

You made it!  

You finally have your first credit card and, you want to know what the next step is in building credit. 

Here’s the great thing, you really only need to do two things to help build your credit.  

One – Make Your Payments On-Time 

Two – Payoff The Majority of Your Monthly Credit Card Balance 

If you do those two things, the credit card company will do the rest.  

When you first open up your account, the first month the credit card company will notify Experian, TransUnion and Equifax (the big three credit bureaus) that you have a revolving loan with them and what your maximum credit limit is.  

Every month they will report your timely payments to the big three credit bureaus which will help establish your credit payment history.  

Your credit payment history accounts for 35% of your FICO score so be sure to not to make any late payments.

The credit card company will also report your balance to the credit bureaus which will affect your debt to available credit ratio which accounts for 30% of your credit score.  

Be sure to keep your credit card balances under 30% of your available credit to keep building positive credit.  

What Are The Credit Card Best Practices? 

Everyone who has had a credit card for any length of time can tell you a mistake they made with their credit card. 

Understanding credit card best practices and having a safe use plan will help you avoid having such a story.  

The NINE most common financial strategies recommended for credit card best practices 

  • Look For Low Interest Credit Cards 
  • Look For Low Fee Credit Cards 
  • Pay Your Bill On-Time 
  • Be Familiar With The Billing Cycle 
  • Only Charge What You Can Afford To Payoff Monthly 
  • Keep Your Balance Low  
  • Review And Monitor Your Credit Card Statement 
  • Stay Away From Cash Advances 
  • If You Get In Financial Trouble Get Help 

 If you follow these 9 strategies for the credit card best practices, you should be successful in building your credit and managing your finances.  

What Are The Most Common Mistakes College Students Make With Their First Student Credit Card? 

#1 – Failure To Start Building Credit In College

Credit takes time to build, and you should start when you enter college. You should start looking at the credit building tool options as soon as you can in college. Graduating college without any established credit history could limit your opportunities and unfortunately, is a common mistake college students make with their first credit card. There are many opportunities for you to start building credit that are available to people who have Bad Credit, No Credit, New to Credit, Poor Credit, or looking to Build Credit.

#2 – Paying Credit Cards Late 

I get it… you’re in college and have a lot of things are going on. It’s easy to forget to pay a credit card on time every month. Is it the end of the world? In one word… YES! Paying credit cards late is one of the biggest credit score killers in the U.S. and is a common mistake with college students first credit card. Millions upon millions of Americans see their credit scores tank because of paying their credit card bills 30 or more days late. There is no good excuse. Every credit card has an app that you can tie to your bank account to pay from the comfort of your phone. If you take away only one thing from these thousands of words about student credit cards…take away this sage advice.

Helpful Tip

You cannot pay your credit cards late or you will get bad credit. Here are a few ideas to help you pay on-time:

1) Checking Account Auto-Pay

2) Credit Card App Pay

3) Set Reminders On Calendar

4) Sticky Note On Your Computer

#3 – Spending Habits That You Cannot Afford 

When I was in college, I saw credit cards as free money. My mindset was to get as many as possible and charge them to the max. Of course, that plan had a huge flaw when the bill arrived, and I didn’t even have enough money to pay the minimum monthly payment and is a very common mistake made by college students with their first student credit card. The problem is you charge yourself into a hole that you have no hope of getting out of. I know it is tough but if you cannot afford it, don’t buy it. The rationale of I’ll buy it now and pay for it later is the biggest lie we tell our instant gratification wanting selves. Stop lying to yourself and screwing over future you by purchasing stuff you can’t afford. Future you will be very thankful, and your credit score will reflect it. Imagine graduating college with a solid credit score and landing that perfect job. Guess what? After some time of proving you have a steady income you may qualify to purchase a home or condo in the hippest part of the city right out of college. There are very tangible advantages to using your credit cards only for good and responsible purchases.

#4 – Failure To Understand Interest

Any balance that you do not pay within the billing cycle of your credit card you will be charged interest.  

Interest is the amount of money that the credit card company charges you for your loan or the total balance on your credit card remaining after you make a payment.  

That balance is multiplied by the interest charge each month and is added to your balance to pay.  

Failing to understand that this interest rate can be pretty high and quickly increase your balance is a common mistake by college students with their first student credit card.  

Recognize that making minimum or close to minimum payments on your first credit card along with carrying high balances is going to lead to some serious interest paid on those purchases.  

Take the time to review your monthly bill and understand how much interest you are paying.  

#5 – Not Understanding Their Credit Score

Spending the time to truly understand your credit score may be the single most important financial decision you make in your life.  

I like learning things that will help me but also things that no one else really knows and I can help them.  

I can almost guarantee you that if you put in the time to understand your credit score, you will also become the resident expert in your group.  

Regardless of the reason, deciding to dedicate the time to reading and learning about how credit scores work will give you numerous advantages over your peers your entire life.  

It is a very common mistake for college students and most of the U.S. not to understand their credit score when they get their first credit card.

#6 – No Budget

Another common mistake for college students with their first student credit card is not setting a monthly budget.  

It sounds like a simple task but many people, not just college students, don’t have a monthly budget to help them live within their financial means.  

What I mean is, they spend more in a month than they make.  

Unless you are the U.S. government, you will not be able to sustain a lifestyle where you spend more than you make.  

It is important to know how much you can spend each month and not exceed that number.  

Many college students and young people forget to keep track and end up with mountains of financial debt by the time they graduate.  

This can lead to late payments and defaults on student credit cards which can cause you to have bad credit.  

Bad credit limits your life opportunities and makes life suck.  

Don’t have a sucky life… set a budget and stick to it.  

#7 – Taking On Too Many Credit Cards

Earlier in this article, we discussed at length how many credit cards should a college student have. Knowing that having too many credit cards is a top mistake made by college students, I still advocated for more than one credit card. Here’s the problem with that opinion… You have to be responsible with your credit cards and all of your financial decisions because they will follow you for the next seven years. Seven years is a long time… consider this, you could have a six-year-old child in 7 years. If that doesn’t sober you up, how about having a 6-year-old child and having bad credit? If you take on a credit card, you need only to charge what you can afford and make the payments on time. Regardless of the number of credit cards you have the same is true for each and every one of them. The credit card companies don’t give participation ribbons for people who pay 75% of their credit card bills on time. They give you big fat credit score deductions instead!

#8 – Only Paying The Minimum

The greatest trick the credit card companies ever came up with was their minimum payment offer. If you had to pay the entire balance on a credit card every month, then you’d automatically only use your credit card when you could afford it. But, they offer you a buy now and pay later carrot with their minimum payment. Whether you understand the calamity entirely in paying the monthly minimum on a credit card while buying things you can’t afford, deep down, you know it won’t end well. If you can only afford to pay your monthly minimums on your credit cards, take this as a huge red flag that you need to make a budget and figure out how to pay more each month. Only paying the minimums on your student credit card is not just a common college student mistake with their first credit card but a big mistake a lot of people make.

#9 – Choosing By Rewards Programs

One of the biggest psychological factors in choosing a student credit card is the rewards programs it offers. Credit card companies are aware of this and sometimes will try and capitalize on college students not realizing how credit cards work. In the U.S. we are a capitalistic society, and the credit card companies are some of the best at separating you from your money. They realize that the majority of people are influenced in their credit card decision by the rewards program. So, they charge a higher annual fee and higher APR rates for their most popular programs. Make your decision on your best first credit card based on the annual fee and the APR on the card, and you will be just fine.

How Much Does A Credit Card Cost (Nine Most Common Fees)?

In theory, credit cards could cost you nothing. If you were to qualify for a credit card with an introductory APR rate of 0% and you paid the entire balance before the billing cycle ended each month. However, Credit Knocks focuses on people who have Bad Credit, No Credit, New to Credit, Poor Credit, or looking to Build Credit. People who fall in those categories will not qualify for a 0% APR introductory rate. But, that doesn’t mean we shouldn’t dream of one day having a great credit score so we can qualify for the best APR deals. To do this, we need to understand everything there is about credit card costs and you can accomplish this goal by familiarizing yourself with the nine most common credit card fees.

  • Annual Fees 
  • Balance Transfer Fees 
  • Cash Advance Fees 
  • Foreign Transaction Fees 
  • Late Payment Fees 
  • Over-The-Limit Fees 
  • Returned Check Fees 
  • Expedited Payment Fees 
  • Finance Charges 

What Happens If I Only Make The Minimum Payments On My Credit Card? 

If you are only making minimum payments on your credit cards, there are a few things you need to know. First, it is good that you are making timely payments on your student credit cards. The worst thing you can do is make late payments on your credit cards. But, another thing to keep in mind about building credit and credit cards is that the credit agencies look at how much available credit you have each month. If you have maxed out your credit cards and are only making minimum payments, then you will not have a lot of available credit, and this could negatively affect your credit score. Not only can carrying a large balance on your credit card affect your credit but it will also cost you a lot of money in finance charges and interest. Most minimum payments include only 1 to 2% of your principal balance, and the rest goes to interest. I’ve seen amortization schedules for some credit cards based on a person only paying the minimum monthly payment, and it can take ten years to pay off a credit card. Minimum payments should only be made under emergency and worst-case scenario situations. If you find yourself making minimum payments on the regs… Step back and take a hard look at your spending habits, create a budget and commit to a plan to start living within your means and pay off those credit card balances.

What Happens If I Don’t Pay My Credit Card? 

If you don’t pay your credit card the company will report your late payments each month to the Equifax, Experian, and TransUnion (the big three credit bureaus). These delinquent payments will negatively affect your payment history which accounts for 35% of your score. One late payment can drive your score down 100 points or more depending on your credit history. Failing to pay multiple payments can quickly drop your credit score from fair, good or excellent to bad or subprime. The great thing about credit cards is that when life throws you a curveball and money is tight, they offer minimum payments. The minimum payments are generally very low where you will only have to pay a small 1-2% of principal and the interest on the balance. Do the best you can never to pay a credit bill late and let alone stop paying. One late payment can stay on your credit report for up to seven years.

What To Do With Your Credit Card When You Graduate? 

When you graduate college what happens to that trusty ride or die college student credit card? You keep using it… When you applied for a student credit card the application terms required that you be a student at that time to qualify for the card. There is nothing in the terms of service that requires you to stay a student to keep using your credit card. Here’s the thing though… Hopefully, you have been responsible and have built up some decent credit over your time in college. Student credit cards tend to have higher APR interest rates because of the higher risk of default associated with someone likely to drink their body weight in alcohol each year. Now that you have some credit, you may qualify for a better credit card with a lower APR and possibly no annual fee. Huge tip… if you do get a new and better credit card, don’t cancel the old student credit card just yet. The credit bureaus like you to have multiple lines of credit and keep track of the length of time you have had your credit including the date of your first credit line. So, canceling the student credit card may hurt your credit.

Check Out The Best Student Credit Card! 

Credit Knocks has looked high and low and we have found you the best student credit card for you! 

Click here to see our Student Credit Card Review. 

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.