Key takeaways

  • Signing up for a credit card can be enormously tempting for college students — and there are plenty of benefits that go along with establishing a healthy credit profile early on.
  • However, easy access to credit can also get you into trouble if you aren't careful.
  • The following tips for student credit cards will help you manage your credit appropriately and set yourself up for a strong financial future.

College students have plenty to juggle, from classes to social activities and all the circumstances that pop up in between. Among all of that, you are learning valuable life skills for your coming adulthood.

One of the most important life skills to learn is how to manage your money, and one tool to do that is a credit card. When used correctly, credit cards can help students lay a foundation for a fulfilling financial future.

That said, not all student credit cards are the same; some may fit the bill for your personal expenses better than others. Furthermore, not handling a credit card responsibly can crack that financial foundation for years to come. Keeping a few fundamental tips in mind when navigating your finances with your first credit card as a college student can get you on the right track fast. Here are seven tips on how to use student credit cards to help you get started.

1. Understand the primary goal is building credit

There are lots of glossy advertisements and tempting promises about credit cards, but your first card is all about building your credit.

Take the opportunity to establish a budget and cultivate responsible habits like paying your bills on time and spending within your means. You can explore various tools for making on-time payments such as autopay or setting up calendar reminders. College students are busy, so take advantage of the tools out there to help you stay on top of your financial responsibilities.

Your credit score will thank you.

2. Decide which purchases to make with your card

Part of making a budget is deciding not just what you’re going to buy, but also how you’re going to pay for it.

Credit scores take your credit usage into account, which means you have to actually use your credit card for it to do its best work for your score. It’s not enough to qualify for the card and then keep it in a drawer. Lenders want to see that you know how to use a card and also pay it off.

Therefore, it makes sense to decide on regular purchases to make on your credit card. Consider small monthly bills or purchases such as:

  • streaming services
  • bus or public transit passes
  • a gym membership
  • a monthly prescription refill
  • regular refills of a campus dining card

Keep in mind that your first credit card will likely have a low credit limit – perhaps even as low as $200. Make sure that whatever bills you decide to put on your card don’t push you over your limit. Also keep in mind that your credit utilization — that is, the amount of credit available to you compared to how much you’re using — also plays a role in your credit score. In fact, it’s FICO’s second most important scoring factor, making up 30 percent of your score. Experts recommend keeping your usage to under 30 percent. Therefore, if you only have a $200 limit, putting your $150 cellphone bill on the card isn’t a great idea. Opt instead for the $30 streaming bill.

3. One card is enough

Once you’re at an eligible age to apply for a credit card, you could have numerous options, but one card should be enough to handle your needs. Applying for multiple cards in a short amount of time and piling up credit inquiries can affect your credit score. Limiting your credit card usage to one card also can make your credit-building journey easier to manage alongside a hectic student schedule.

To start narrowing down your options and understanding your approval odds (without extra hard credit checks), use Bankrate’s CardMatch™ tool.

4. Only spend what you can pay back

Remember that the credit limit your issuer sets for your card is the maximum amount you can spend. It isn’t necessarily what you should spend. Whatever you spend, you will have to pay back. Only buy what you can afford to pay off in full each month so you can avoid added interest charges.

Avoid getting into a cycle of only making the minimum payment if at all possible. Only making minimum payments means you’re likely racking up interest charges and making it harder to get out of debt.

5. Always pay on time

It’s important to know how payment history affects your credit score. No matter how busy your schedule gets, make it a priority to pay your credit card bill. Payment history makes up 35 percent of your score in the FICO model. Since payment history accounts for such a large chunk of your score, it’s crucial that you always make your credit card payments on time.

Even if you can’t pay the bill in full one month, still ensure you make at least the minimum payment by the due date to protect your credit history.

6. Build credit first, earn rewards second

You won’t be able to access the most sought-after credit cards later on without building good credit now. If you’re in college and you’re getting your first credit card, your primary focus should be building your credit history and a good credit score with responsible habits.

Rewards and benefits are a great perk of using credit cards, but they can quickly get distracting. Aim to get a card that offers tools and incentives that focus on credit building, such as payment reminders, credit score trackers and credit limit increases after demonstrating consistently good credit habits.

7. When in doubt, pick a student card

As a student, you’re afforded a valuable asset in the credit card market: the student credit card. Designed with students in mind, these cards offer benefits geared toward your needs. The best student credit cards usually have fewer fees, better APRs than credit cards for non-student borrowers with no credit history and an option to upgrade to a non-student version after graduation.

The bottom line

A credit card can help you build up a good credit history and score early on, which can in turn help you hit future financial milestones — like buying a house — more quickly and easily. Good credit comes from consistently good habits, so always pay your bills on time, don’t bite off more than you can chew, start slowly, stay consistent and always focus on what matters most for your financial future.