Student Credit Cards 101: Expert insight into plastic for students

*Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

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*This post was last updated December 2014.

One of the many things students need to understand before getting their diploma is how to manage their personal credit and how to use a credit card responsibly. Student credit cards offer many tools to help facilitate that kind of financial education, and with the right kind of credit card selection, it is possible to gain some cool and convenient benefits from plastic designed especially for the student.

The CARD Act of 2009 changed the entire landscape of students and credit cards. Those who are under the age of 21 must have a co-signer or show proof of reliable income in order to get a credit card. One thing to consider when shopping around for a student credit card is that there are more than one kind of student card, depending on such things as what kind of credit you have and what sorts of perks or benefits you want.

Types of Credit Cards Appropriate for Students:

One of the first hurdles that most students have to overcome before they can get their hands on their own credit card is building their credit history. New card owners typically have no track record or data in their credit report, limiting the options to students right out of the gate. A prepaid debit card won't help you build credit, so only use those if it's just a personal preference, or if you would like to get used to how plastic works before you get a traditional credit card. Secured credit cards will report your account activity to the credit bureaus so you can start to build credit. After about one year of on-time payments and responsible card use, you should be able to get an unsecured credit card.

Those who already have a history of credit, such as upper-class college students, can apply for their own credit card without help from their parents. There are lots of great student credit cards available that come with some perks and benefits, and even some that come with an introductory period of interest fee payments.

Many companies combine rewards programs and cash back programs to give students even more incentive to use their cards. Of course, parents know that such motivation can often translate into excessive credit card use, so these types of cards usually come with tools to help kids manage their money. The Journey Student Rewards Card from Capital One, for instance, gives student cardholders free text and e-mail alerts to help them monitor their credit card use. You can also use online tools to alert you if you approach your credit limit and get access to free calculators that help you figure out how to pay off your balances faster and cheaper.

There are also innovative cards to help you save for your college tuition, such as the Fidelity Investments 529 College Rewards Card. This comes with a rewards program connected to savings account, so that parents or grandparents can use their credit card while helping save money for a child's college education.

Many banks offer credit cards with no annual fees that also come with a nice rewards program and/or other valuable features. These traditional-type credit cards are available for any type of consumer, whether you're a student or not. Some categories of spending that you can earn bonus rewards for include gas, food, and entertainment.

Beware of Pushy Banks

Some banks pay money each every school year to colleges and universities (and pay bonuses) if they generate a certain volume of business from students. Once these multi-million dollar deals with banks were brought to light, many parents were infuriated and some students even sued colleges for selling their personal information to third parties. Since the CARD Act, however, these types of agreements have declined by 70 percent.

So while cards are still being promoted on campus, the financial incentives to push credit card sign-ups have been curtailed. One of the new laws, for example, prohibits campuses from letting banks advertise to underage students without parental permission.

But another way to find applications or offers for student credit cards is to simply look around our website. To help you sort out all the options and weigh the pros and cons of each card while comparing it to others, we have provided plenty of free credit card reviews, summaries, and calculators. You can find out whether you have to have excellent credit to qualify, see which ones have no annual fee, and you can evaluate the rewards programs and cash back savings potential of the most popular rewards credit cards.

* Editorial Note: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are the author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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