Pros and cons of student credit cards

College students who need help building credit have a few different tools to consider, and that includes student credit cards that are geared to their demographic. While student credit cards are a type of unsecured credit card, these cards are different since they are typically easier to qualify for than other cards. You’ll also typically need to prove enrollment in a college, university or trade school to qualify.

The best student credit cards help build credit since they’ll report users’ balances and monthly payments to the three credit bureaus. This helps young people increase their credit scores as they make on-time payments — which is an important consideration since the average credit score for Generation Z is 679 and the average credit score for all age groups is 714.

If you’re a college student who wants to build credit and you’re considering all your options, read on to learn the pros and cons of student credit cards.

Pros of student credit cards

Although student credit card offers vary, cards in this niche come with a range of benefits young people can access.

Build your credit

The main reason to get a credit card in college is to begin building credit, and this is based on the fact that student credit cards report to the three credit bureaus — Experian, Equifax and TransUnion. Because payment history is the most important factor of FICO scores (making up 35 percent), getting a student credit card and always paying the bill on time can have a profound, positive impact on a college student’s credit score.

Some student credit cards, including the Discover it® Student Cash Back, don’t even require a credit score to apply. This means you can use student credit cards to build credit from the ground up.

Learn positive credit habits

Getting a credit card also helps young people learn positive 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 somewhat “sheltered” environment.

Also, note that many student credit cards let you work toward a higher credit limit as you build positive habits. This includes the Chase Freedom® Student credit card*, which considers students for a higher credit limit after five months of on-time payments within 10 months of account opening.

Access rewards and other perks

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

Other benefits you can get 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.

Use the card for emergencies

Having a credit card means you’ll always have access to some money when you are in an emergency situation. You can use your credit card to pay an unexpected bill if you have to, or to cover an emergency car repair or medical bill.

Credit cards are convenient and safer to use

As a final benefit, credit cards are downright convenient, and that’s especially true in today’s world. Having a credit card makes online shopping considerably easier, and you’ll typically need a credit card to rent a hotel room or a car. Plus, credit cards are also safer to use than debit cards since they come with more fraud protection benefits.

Cons of student credit cards

Student credit cards come with many advantages, but there are potential drawbacks to watch out for. Consider the following problems that could occur if you get a student credit card.

Potential to rack up long-term debt

The average Generation Z consumer has $2,282 in credit card debt. That’s actually less than other age groups, but it’s still problematic since younger adults are just starting out in their financial lives.

High interest rates make borrowing expensive

Current credit card interest rates are hovering above 20 percent on average, which is incredibly high. If a young person racks up considerable credit card debt at that rate and makes only the minimum payment, they could wind up spending thousands of dollars in interest and taking years to pay off their purchases.

You could hurt your credit score

Also remember that credit cards are a tool for building credit, but they’re not a sure thing. 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. This means that, if you rack up large balances or constantly max your credit limit out, your credit score could be negatively impacted.

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 student credit card alternatives like secured credit cards and credit-builder loans.

You can also move forward with a student credit card if you feel confident in your ability to maintain control. For the most part, the best credit card tips for students include only using credit cards for purchases you can pay off and making on-time payments each month no matter what.

The bottom line

The best student credit cards can help you ease into credit building and earn some rewards at the same time, but don’t forget to compare card options from different issuers. Take a close look at all the best credit cards for students based on their rewards, perks and credit-building power, and you’re bound to find the right card for your needs.

*The information about the Chase Freedom® Student credit card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.