Getting your first credit card is a step toward financial independence and confidence. For college students, understanding the benefits and responsibilities that come with having a credit card can set the foundation for a strong financial future. Starting early with a student credit card can allow students to build credit, learn financial management, and prepare for larger financial decisions post-graduation.
Understanding Credit Card Age Requirements
To obtain an unsecured or traditional credit card in the U.S., you generally need to be at least 18 years old. If you are under 21, you must have proof of independent income or likely need a cosigner to qualify. Individuals under 18 cannot apply for a credit card on their own but can become authorized users on a parent’s or guardian’s credit card. Being an authorized user helps young individuals build credit before they can apply for their own card. These age requirements ensure that applicants have the legal capacity to enter into a contract and the financial means to manage credit responsibly.
College Ave’s Ambition student card is a secured credit card for college students that does not require a cosigner, but still helps students build their credit history.
Why Getting a Credit Card Young Matters
Starting to build credit at a young age has significant benefits. A strong credit history opens doors to various financial opportunities such as obtaining loans with favorable terms, qualifying for mortgages, and securing better insurance rates. Early credit building can also impact future financial opportunities, making it easier for students to achieve their financial goals.
How to Get a Credit Card as a Student
Applying at 18
Once you turn 18, you can apply for a credit card. The typical requirements include proof of income to demonstrate your ability to repay the debt. If you don’t have sufficient income, you may need a cosigner, usually a parent or guardian, who agrees to take on the financial responsibility if you default on payments. It’s important to gather all necessary documents, such as proof of income and identification, before applying.
Authorized User Option
Another way for students under 18 to start building credit is by becoming an authorized user on a parent’s credit card. You can use the credit card, but the primary cardholder is ultimately responsible for the payments. This arrangement helps you build a credit history without the legal responsibility of a credit agreement. However, it’s crucial to have a clear understanding with the primary cardholder when and how you’ll use of the card.
Secured Credit Cards
Secured credit cards are an excellent option for students looking to build credit. These cards require a security deposit, which acts as your credit limit. The deposit minimizes the risk for the issuer and helps you build credit as you make timely payments. Secured credit cards are reported to credit bureaus, making them a good stepping stone to unsecured cards.
Student Credit Cards
Student credit cards are specifically designed for college students. They often come with lower credit limits, no annual fees, and rewards programs tailored to student spending. These cards are easier for students to qualify for compared to regular credit cards and help students start building their credit history. When choosing a student credit card, look for features that align with your spending habits and financial goals.
Factors to Consider When Choosing a Credit Card
Annual Fees
Finding a card with low or no annual fees is important, especially for students who may not have a steady income. Annual fees can quickly add up and negate the benefits of rewards and other perks. A card with a low or no annual fee helps maximize the value you get from using it.
Interest Rates (APR)
Understanding how interest rates work and their impact on your overall cost of borrowing is essential. The Annual Percentage Rate (APR) is the interest rate charged on any outstanding balance plus any fees. Compare interest rates among different cards, as a lower rate can save you money if you carry a balance. A lower APR is particularly beneficial for students who might occasionally carry a balance, as it reduces the amount of interest accrued over time.
Rewards and Benefits
Credit cards often come with rewards and benefits such as cashback, points, and discounts. Aligning these rewards with your spending habits ensures you get the most out of your card. For example, if you frequently spend on groceries and gas, look for a card that offers higher cashback in these categories. Rewards and benefits can also include perks like extended warranties on purchases, purchase protection, and access to exclusive events or experiences.
Credit Limit
The credit limit is the maximum amount you can borrow on your card. A higher credit limit can be beneficial, but it’s important to choose a card with an appropriate limit that matches your financial situation. Your credit utilization ratio, which impacts your credit score, is calculated based on your credit limit and outstanding balance. Keeping this ratio below 30% is advisable. A card with a flexible credit limit that can grow as your financial situation improves is ideal.
Introductory Offers
Many credit cards offer introductory deals such as 0% APR for a certain time period or bonus points for spending a specific amount within the first few months. These offers can provide significant savings initially, but it’s important to understand the terms and what happens after the introductory period ends. Introductory offers can be particularly appealing for large purchases or balance transfers, but you should plan to pay off any balances before the promotional period ends to avoid high-interest rates.
Additional Fees
Credit cards may come with additional fees such as foreign transaction fees, late payment fees, and balance transfer fees. Be aware of these potential fees and find ways to avoid or minimize them. For example, if you plan to use your card abroad, look for one with no foreign transaction fees. Other fees to consider include cash advance fees, over-limit fees, and returned payment fees. Understanding the full fee structure of a card can help you avoid unexpected costs and make a more informed decision.
Tips for Using a Student Credit Card Wisely
Pay Your Balance in Full
Paying your credit card balance in full each month helps avoid interest charges and keeps your debt manageable. It also demonstrates responsible financial behavior, which positively impacts your credit score.
Make On-Time Payments
Setting up automatic payments can ensure you never miss a payment. On-time payments every month also demonstrate good financial habits and responsibility, which could positively impact your credit.
Keeping Your Credit Utilization Low
Credit utilization refers to the percentage of your available credit that you’re using. Keeping this ratio low (below 30%) is important for maintaining a good credit score. High credit utilization can indicate financial stress and negatively impact your credit rating.
Avoiding Unnecessary Debt
Avoiding unnecessary purchases and managing credit responsibly is key for maintaining financial health. Use your credit card for planned expenses and emergencies, and avoid impulse buying. This practice helps keep your debt low or that you can pay your balance in full each month. Creating a budget and sticking to it can help you manage your spending and avoid accumulating debt.
College Ave’s Ambition Card – A Card for Students to Build Credit
The College Ave Ambition Card is a credit card specifically designed for college students. It has no annual fees1, no interest, and offers cashback rewards2 on everyday purchases. These features make it an ideal choice for students looking to safely build their credit history3 and responsibly manage their finances. The rewards program includes cashback on categories relevant to students, such as groceries, dining, and transportation. Additionally, the card offers educational resources to help students understand credit and manage their finances wisely.
Get Started with College Ave’s Ambition Card to take control of your financial future.
Footnotes
1 0% Annual Percentage Rate. Account is subject to a monthly account fee of $2, account fee is waived for the initial six-monthly billing cycles.
2 Cash back rewards are subject to the Ambition Rewards Terms & Conditions.
3 The Ambition Card is designed to help you build your credit history; however, a variety of factors impact your credit including payment history, utilization, derogatory marks, account age, total number of accounts, and inquiries–not all factors are equally weighted.
