Key takeaways

  • Student credit cards can help you build your credit, establish positive credit habits and access rewards and other perks.
  • They tend to be easier to qualify for, since you don't need to have a good credit history for approval. This also means issuers typically set lower credit limits on these cards to better protect themselves from default.
  • If used irresponsibly, student credit cards can harm your credit score. This may happen if you carry long-term credit card debt, miss a credit card payment or have a high credit utilization ratio.

College students who are new to credit and looking to build their credit score have a few tools to consider, including student credit cards designed to put you on a steady financial path. These unsecured credit cards are typically easier to qualify for than traditional credit cards.

The best student credit cards report your responsible spending and on-time monthly payments to the three major credit bureaus, helping you to build your credit score — an important consideration, given the average credit score for Generation Z is 679, which is 37 points lower than the average credit score.

If you’re a college student looking to build credit and considering your options, weigh the pros and cons of student credit cards.

Pros of student credit cards

Easy approval with no credit

If you’re the typical student who doesn’t have much of a credit history, a significant advantage to student credit cards is that they tend to be easier to qualify for. Some student credit cards — including the Discover it® Student Cash Back — don’t require a credit score to apply, and most have more lenient income qualification requirements This means you can use student credit cards to build credit from the ground up.

Build a positive credit history

The main reason to get a credit card in college is to begin building credit, and student credit cards help by reporting your account activity to the three credit bureaus — Experian, Equifax and TransUnion. Because payment history is the most important factor of FICO scores, making up 35 percent of the score, getting a student credit card and always paying your bill on time can have a major, positive impact on your credit score.

There are multiple benefits to having a good credit score. Good credit allows you to get low interest rates and strong terms on loans you might take out in future. For instance, if you apply for a mortgage loan to buy a house, your good credit score will garner you a lower interest rate.That in turn could save you thousands of dollars over the years in interest payments.

Also, landlords look more favorably on you if you have a high credit score, because they’ll see you as more likely to pay your rent regularly. Even potential employers may turn to your credit score to vet you for employment. And a higher score can help you qualify for credit cards with better features and higher rewards.

Learn positive financial habits

Getting a credit card helps young people learn responsible financial habits, including tracking their spending and paying their bills on time. Since student credit cards tend to come with low credit limits at first, these lessons can be learned in a “sheltered” environment without the risks that come with higher credit limits.

Also, many student credit cards let you work toward a higher credit limit as you build positive habits. The Chase Freedom® Student credit card* automatically considers students for a higher credit limit after five months of on-time payments within a 10-month period.

Take advantage of rewards and other perks

Some student credit cards offer cash back on your purchases or other types of rewards. For instance, the Chase Freedom Student card offers a $20 good standing reward each year after your account anniversary for up to five years.

Other benefits may include free credit score access, no foreign transaction fees (which is great if you plan to study abroad) and 0 percent intro APR offers on purchases or balance transfers for a limited time.

Pay for emergency expenses

Having a credit card means you’ll have access to money for unexpected emergencies — from surprise car repairs to medical bills. Just be sure to have the cash to pay off your balance as soon as possible to avoid unnecessary interest.

Enjoy a convenient and safer way to spend

Credit cards are convenient, and that’s especially true in today’s world. Unlike cash, a credit card can help you shop online with ease, and you’ll typically need a card to rent a hotel room or a car. Plus, credit cards are also safer to use than debit cards, offering more robust fraud liability protections that debit cards don’t.

Cons of student credit cards

Potential to rack up long-term debt

There’s no doubt that a credit card can feel like “free money.” But if you’re not able to comfortably pay off what you charge each month, you risk heavy interest fees that can spiral into long-term debt. In fact, some 46 percent of Gen Zers who carry a credit card balance report being in debt for at least a year.

As you get your financial life up off the ground, take care to avoid getting carried away with the access to spending that cards offer. The key is learning how to use a credit card wisely.

High interest rates make borrowing expensive

Credit card interest rates currently sit above 20 percent on average, which is incredibly high. If you aren’t careful with your spending, you could end up racking up considerably high interest credit card debt that can take years to pay down — and, importantly, eroding the credit building opportunity that student cards offer.

Commit to paying more than your minimum each month, ideally shooting to pay off your bill in full, if you can.

Lower credit limits are typical

While it’s easier to qualify for a student card over traditional credit cards, the trade-off is that they tend to come with lower credit limits. Lower limits protect card issuers, since those without much of a credit history are viewed as a higher risk for defaulting on or not paying back what they borrow. After you’ve established a good credit score, you can set your sights on a stronger credit card with a higher credit limit.

You could hurt your credit score

Credit cards are a tool for building credit, but they’re not a sure thing for stronger credit. Since your payment history is the most important factor that makes up your FICO score, for example, making late payments can dramatically harm your credit over the long run.

Also, note that your credit utilization ratio — or the amount you owe in relation to your credit limit — makes up another 30 percent of your FICO score. It means that, if you rack up large balances or constantly max your credit limit out, your credit score could be negatively affected.

Should you get a student credit card?

The pros and cons of student credit cards are worth keeping in mind before you sign up, and that’s especially true if you’re worried about how you’ll handle credit. If you feel like you might not make payments on time, or that you’ll be tempted to overspend, you may want to look into an alternative like secured credit cards or credit-builder loans.

If you’re confident that you can use a credit card responsibly, a student credit card could be a good first step into credit, learn how to choose the right student card for your budget and long-term goals.

The bottom line

Student credit cards can be easier to qualify for and have their advantages. They have their disadvantages too since they might induce you to take on more debt than you can handle. The best student credit cards can help you build a credit history with more lenient requirements and lower fees than a traditional credit card, as well as the option to upgrade to a stronger card with responsible spending and on-time payments. Just take care not to spend more than you can comfortably afford to pay off each month.

*Issuer-required disclosure statement
Information about the Chase Freedom® Student credit card has been collected independently by Bankrate. Card details have not been reviewed or approved by the card issuer.