Using a credit card in college has a lot of benefits, from everyday convenience to peace of mind in emergencies and most significant of all, the opportunity to build credit. So, should you have a credit card in college? You should consider getting a credit card in college if you’re sure you’ll use the card responsibly. If you think you might use the credit card recklessly, it’s probably best to wait.
Benefits Of Having a Credit Card in College
Understanding the benefits and downsides of having a credit card in college can help you decide whether or not it is right for you.
#1. Establish Your Credit History
Getting a head start on building positive credit history is the biggest benefit of having a credit card in college.
Establishing credit history is more useful than many people realize. It can open a lot of doors for you, from getting approved more easily for credit cards, mortgages, and loans to scoring lower interest rates on all lines of credit. And using a credit card is the best way to start building your credit history and credit score.
As you’re legally allowed to own a credit card only after the age of 18, chances are your credit history and credit score are non-existent at the time of joining college. Getting that credit card can give you the opportunity to establish your credit history and build your credit score.
Before you run off to apply for a credit card, there are some basic things you need to know about using it to establish your credit history. You can only build your credit score if you use your card responsibly and pay your bills in full before the payment due date. This is absolutely critical to establishing good credit history. Every time you make the full payment on time – both conditions must be met – your credit score improves by a few points. But, if you can’t afford to pay the full amount or you miss one deadline, it will shave a few points off your credit score. And that record will stay on your history for 7 years.
Pro Tip: If your aim for getting a credit card in college is to establish credit history, you absolutely must commit to using it responsibly. If you’re a compulsive shopper, it’s better not to get one.
#2. Purchase Flexibility & Everyday Convenience
Funds can be tight when you’re in college and you may not always have funds available at all times, especially when you’re in between pay checks. At times like these, having a credit card can be a huge relief. You don’t have to wait till your next pay check arrives to buy essential items. You can swipe your credit card and buy whatever you need when you need them.
Pro Tip: It’s worth reiterating that you make sure you only use your credit card for purchases that you know you will be able to pay back in full by the due date. If you overspend, you’ll end up with damaged credit as well as credit card debt, both of which are disastrous.
#3. Increased Sense of Security
From train and bus fares to grabbing a sandwich on the run or buying groceries or school supplies, you need to have money on you for purchases small and large all day long. Without a credit card, you have no other option but to carry cash with you at all times. But there is an element of risk when carrying large amounts of cash on person. If your wallet is stolen, all the cash in it is lost forever. You can’t get it back.
On the other hand, credit cards are secure. If your credit card is stolen, you can simply call the credit card helpline and request them to freeze the card and issue you a new one. All fraudulent charges can be disputed too.
Pro Tip: Always keep in mind how much money you have available in your savings account and whether it will be enough to pay off the credit card bill by the due date. You don’t want to spend more than you have in your account right now or will get into your account with the next paycheck.
#4. Peace of Mind in Emergencies
This is another big benefit of having a credit card in college. You never know when an emergency may arise and when it does, knowing that you have a credit card can be immensely comforting. Whether you need money for urgent medical or dental treatment, emergency car or computer repairs, or unexpected travel plans, your credit card can save the day.
Pro Tip: Every card has a credit limit. That is the maximum amount you can spend using the card. Your card will be declined if you try spending more than the limit on your card. Make sure, at all times, not to maximize the credit limit so you can actually use it when an emergency does come along. If you do, your credit card will in fact be of no use in the event of any emergency.
#5. Enjoy Cardholder Perks
This is another big benefit that comes with credit cards. After all, who doesn’t like rewards and perks! Different cards offer different rewards. You can choose from cards that offer cash back to those that offer travel rewards. Depending on the type of card you have, every time you swipe it, you get cash back or miles in the form of points that can be redeemed.
A student credit card is designed for young adults with no income and no credit history and is the best option for college students. The only requirement for getting approved is enrollment in an accredited 4-year university.
Besides easy approval, another benefit is the absence of annual fees, which makes it affordable when you’re on a tight budget as a student. Best of all, you get a variety of rewards or credit points for every dollar spent using the card. And lastly, it qualified you for discounts at a number of stores.
Pro Tip: A student credit card can be a powerful tool when you’re just getting started on your financial journey. The cash back and discounts can add value to every purchase. This can make a huge difference when you’re on a budget. The added bonus will be a stronger credit score (when you use your card responsibly and pay in full by the deadline).
#6. Get Better Student Loan Rates
If you get a credit card during your first year in college and use it responsibly, by the time you’re in the third or fourth year, you will have established some credit history. If you need to take a private student loan in your third or fourth year or you need a loan to fund your post-graduate degree, your credit score will help you score a lower interest rate. This can make a huge difference to the cost of the loan and the cost of your degree too! Even small drop-in interest rate can save you thousands of dollars in accrued interest over the life of the loan.
Pro Tip: Keep your credit utilization low. Pay those bills in full every single time to cut down your rate on future student loans.
#7. Get Better Auto Loan & Auto Insurance Rates
It’s the same as with getting student loans. Since you’ve established you credit history and increased your credit score from zero, auto loan lenders will approve your application more easily and quote a lower interest rate. Remember, using your credit card responsibly and making all payments in full and on time is key.
Responsible use of your credit card could help you get more favorable vehicle insurance rates too. Every insurance company has their own formula for determine vehicle insurance rates. Regardless, you will get a lower rate than others if your payment history is impeccable and your credit score has improved.
Pro Tip: On-time payment history is the key to snagging those lower loan and insurance rates and racking up those savings.
#8. Makes It Easier to Rent or Buy a Home or Apartment
Not all landlords bother with credit history but an increasing number have started checking prospective tenants’ credit history. This is to ensure that you’re a responsible tenant who’s more likely to pay the rent on time. A good credit score and impeccable credit history indicates that you’re financially responsible and you have the funds to pay your dues on time.
Without any credit history, it’s impossible for a landlord to assess you as a client. Many prefer not to deal with the uncertainty and would rather not rent to tenants without credit history.
If you’re looking to buy, a strong score will get you approved for a mortgage more easily. Plus, you’ll pay a lower insurance rate too.
| Rates | Terms | Eligible Degrees | ||
|---|---|---|---|---|
 Compare rate offers from about 8 lenders | 1.04%* + variable APR 3.30%* + fixed APR | 5 - 15, 20 years | Undergrad & Grad | LEARN MORE › |
 | 1.13% - 11.23% variable APR 3.50% - 12.60% fixed APR | 5, 10, 15 years | Undergrad & Grad | LEARN MORE › |
| Lender | Rates (APR) | Eligibility | |
|---|---|---|---|
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6.97%-15.03%* Variable
5.99%-14.00%* Fixed
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Undergraduate and Graduate
|
VISIT CITIZENS |
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6.37% - 16.70% Variable
4.50% - 15.49% Fixed
|
Undergraduate and Graduate
|
VISIT SALLIE MAE |
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4.98% - 16.70% Variable
4.07% - 15.66% Fixed
|
Undergraduate and Graduate
|
VISIT CREDIBLE |
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6.07% - 11.31% Variable
4.39% - 10.39% Fixed
|
Undergraduate and Graduate
|
VISIT LENDKEY |
|
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6.22% - 16.08% Variable
4.09% - 15.66% Fixed
|
Undergraduate and Graduate
|
VISIT ASCENT |
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6.54% - 11.08% Variable
3.95% - 8.01% Fixed
|
Undergraduate and Graduate
|
VISIT ISL |
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5.62% - 18.26% Variable
4.11% - 15.90% Fixed
|
Undergraduate and Graduate
|
VISIT EARNEST |
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4.98% - 12.79% Variable
8.42% - 13.01% Fixed
|
Undergraduate and Graduate
|
VISIT ELFI |
