Best Credit Cards for College Students – Charge Wisely & Build Your Credit History

August 20, 2008

A review of the best credit cards for college students can have two very different outcomes depending on whether the student is responsible enough with money to pay off the bill when they sign up for a credit card.

Who Should Have a Student Card?
For students that will carry a balance, the best credit card is no card at all; too many students leave college with enormous debt due to an inability to pay off the things they charge on their cards.

On the other hand, if you’re good enough with money to only buy the necessary items and pay off your balance each month then a student credit card can be a good way to build your credit history.

Reasons Not to Open a Credit Card
Let’s start off by looking at the reasons why you shouldn’t apply for a student credit card. 

You shouldn’t open a line of credit if you’re doing so on a whim.  You’ve all probably seen booths on campus where you can get free food, T-shirts, or other items in exchange for filling out a credit card application.  Trust the thousands of students deep in debt across the country who would tell you emphatically that the free stuff isn’t worth the card.

Avoid a credit card if you don’t have a plan for how to use it or an income to pay it off.  This goes along with not opening a credit card on a whim; you should know what expenses you’ll put on the card and where the money will come from to pay off the balance each month.

If you’re an impulse shopper, don’t get a credit card. The temptation to buy something in the heat of the moment and figure out later how to pay for it will be too great.  Save yourself hassle and a lot of interest payments and don’t sign up for a student card.

Lastly, here’s a list of common credit card mistakes that college students should avoid.

Benefits of a Credit Card
When I was in college I used a credit card to pay for certain miscellaneous expenses.  I didn’t have a big bill every month so I made enough from my campus job to pay off the balance and after four years I had established a flawless credit history.

Build a Good Credit History
When I went to rent an apartment right out of school the building manager was very pleased when he ran my credit report and commented at how very few college grads have a positive credit history.  With more and more businesses using your credit report to gauge risk, having a positive history once you leave school can be very helpful.

Buying a House – For example, when my wife and I went to buy a house a few years out of school, I was eligible for a great interest rate based on my credit history.  My wife on the other hand never had a credit card or any type of loan payment so she had zero credit history. 

Putting her name on the loan would have required us to pay a higher rate on the money we were borrowing so we left her off entirely. She was kind of upset, she had avoided opening a credit card in college to be financially safe but down the road her lack of a credit report worked against her.

No Late Payments or Balances – A key point to remember here is that this approach only works if you make your payments on time each month and don’t leave school with a pile of credit card debt.  A history of missed payments or a big balance will hurt, rather than help, your credit score.

Choosing a Credit Card
The criteria for finding the right credit card for college students should be:

  • No annual fee
  • Low annual percentage rate (APR)
  • Free online account access and management

The emphasis here is on keeping any fees to a minimum and making it easy to manage and pay your credit card bill.  Even though you don’t want to carry a balance, you should still look for the lowest APR in the event there’s a month where you’re charged interest. Most of the student cards offer an introductory period where you pay 0% interest but remember it’s only for a short time period, typically 3 – 6 months, and then the APR goes up.

One other thing to look for in a student credit card is a free rewards program.  If you’re not going to be putting a lot of expenses on your card then it’s not as important but if you plan on charging larger amounts then a rewards program can pay off.

Best Student Credit Cards


In terms of APR, the Citi Platinum Select Card for College Students has the lowest rate available today for students.  Since it has the best interest rate along with no annual fee and free online account management it would be a good choice.  The one thing it doesn’t offer is a rewards program, which leads us to the next student card.

Charge Wisely
If you’re smart about how you use credit in school you can graduate and enter the “real world” with a good credit history.  If it sounds like too much work to manage a credit card or too much temptation to overspend then you’re better off just paying by cash or check in your college years.

This review of the best student credit cards and how to build/protect your credit history in school is part of the College Student Money Guide.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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17 Responses to Best Credit Cards for College Students – Charge Wisely & Build Your Credit History

  • Anonymous

    college student credit card holders have to learn how to handle their finances smartly. They should be more responsible with their spending habit. Paying off their bills on time can certainly help them keep away from financial debt problems and high interest rate.

  • Connie Brooks

    I saw statistics this morning that said a third of all college students graduate with over $5,000 in debt – that is terrible.

    What’s worse is that you have credit card companies giving away iPods and T-shirts on campus to get students to sign up for cards.

    I definitely agree that students should take personal finances courses. I also believe that parents should do a much better job informing kids about credit, credit histories, and the additional cost involved when you borrow money for things you don’t really need.

    @Capital Couples Finance, I agree, a low limit card is a good idea, but I disagree with the gas card. Considering how much gas costs, I think that could encourage kids to run up more money than they intend to on the card each month.

    @ CK – yes, that was a very good rate about the introductory offers. Fine print is a bear, but you’ve got to read it.

    Another important point is to never take out cash advances if you carry a balance. Cash advances are always computed at a higher interest rate, and they are the last thing the credit card company applies your payment to. So, you may have a card with a 9% interest rate, take out $100 as a cash advance, and end up paying 24% on the advance as long as you carry a balance.

    @ ToughMoneyLove would you recommend an increase in the minimum age required to get a credit card, or no credit cards at all, for anyone ever? I’d be really interested in getting your viewpoint on that!

  • Ben

    Capital Couples, that’s a good point. A low credit limit would definitely help keep from overspending, I’m not sure if you can call a company and ask them to lower the limit on a card, I’ve never tried.

    ToughMoney, I definitely agree that there is a lot of money being spent on courses that don’t further a students chances of getting a job once they graduate. I can think of several classes I had to take that were a waste of time from a career standpoint.

    I also agree that requiring some type of personal finance course would definitely benefit many students, and a portion of the course should cover credit cards and debt. The reason I cover student credit cards is that they’re a reality of finance in student life. Obviously there are some people who just aren’t responsible enough to manage a credit card during their college years but there are many others who are up to the task and can build a solid credit history that will benefit them in life after school.

    How do you tell the difference between the two groups and protect the financially immature? Unfortunately, I don’t know if anyone has a good answer to that.

  • ToughMoneyLove

    The only good credit card for a college student is ……. sorry, couldn’t think of one. It is bad enough that so many students are borrowing so much money for an education full of so much meaningless fluff that it all fades away within 6 months after graduation. The one good course they all should take is personal finance but of course they don’t. Too busy taking courses in 18th century French feminist theory. And you want them to have credit card debt too? Shame.

  • CK

    Another thing to keep in mind when choosing a student credit card is that most of them come with some sort of promotional offer (such as variable APR after a short time) that one needs to be aware of. Just because the introductory offer is low doesn’t mean it will be that way in 12 months. Read the fine print.

  • Capital Couples Finance

    I would add to this, make sure and keep the credit limit low, so there is no temptation to splurge. A good place to start might be a gas card, so that its use would be very limited. This would allow the student to get the feel for what its like to have a bill to pay at the end of every month, while avoiding the temptation to use it for shopping and drinks.


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