A student credit card can be a great option for young adults in college, but being a student isn’t the only criteria to consider. Most student credit cards are designed to serve individuals who need to start building credit from scratch, but like any credit card, it’s important to ensure that you understand all of the potential risks and consequences of using a credit card as well as all the potential benefits.

The following are good indicators that a student credit card could be a good choice for you.

You Need to Establish Credit History

Everyone has to start somewhere with building credit history, and before student credit cards it could be difficult to find a good credit card to build your credit.

Student credit cards often come with spending limits which can mitigate the amount of debt borrowers can accumulate and perks such as cash back on textbooks that can help borrowers save money while learning how to borrow responsibly.

You Understand How to Budget

Having some knowledge of budgeting will help when using your student credit card. While the consequences of making mistakes with a student credit card are not usually as drastic due to their spending limits, the benefits of doing everything right with a student credit card are just as good as they would be with any other credit card.

The name of the game is establishing a good credit history and credit score — the amount of your balance is not nearly as important as how soon and how regularly you pay it off.

You Can Earn Rewards on Large Purchases

It’s no secret college textbooks and other educational materials can be expensive, and credit cards can be a great tool for making those purchases thanks to cash back rewards and giving you time to pay off the balance.

If you’re considering using your student credit card for a purchase you’ll have to pay off over time, be sure you’re aware of the interest rate of your credit card compared to other loans. For example, if you need to spend $1,000 on textbooks for a semester and if you can pay for them with your student credit card or student loans, which one offers a lower interest rate, and how much cash back will you receive for the purchase? These questions and calculations will help you make informed decisions while investing in your education and with any large purchases you make throughout your life.

The Bottom Line

Student credit cards are a great option for responsible students. Like with any credit card, there is some risk that can come with using a student credit card if borrowers don’t use it responsibly, but unlike other types of credit cards available to those with little to no credit history, student credit cards tend to offer a plethora of perks that make them a great tool for building good credit.

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Contact Information:

Name: Michael Bertini
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Job Title: Consultant

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