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Understanding Student Credit Cards vs. Regular Credit Cards

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding student and regular credit cards. For any mortgage-related needs, feel free to call us at 213-732-3074.

What’s the Difference Between a Student Credit Card and a Regular Credit Card?

Student credit cards are tailored for students who may have limited credit histories and different financial priorities compared to non-student cardholders. Here are some key differences:

• Credit limits: Student credit cards typically have lower credit limits, often starting as low as $500, reflecting students’ limited earning potential while in school.
• Fee structure: Many student cards do not have annual fees and may waive the first late payment fee to help students adjust to regular bill payments.
• Perks: Student cards often offer rewards on categories like streaming services, groceries, and gas. Some also feature introductory 0% APR offers, which can be beneficial for those with little to no credit history.

Regular vs. Student Credit Card Requirements

The requirements for obtaining a student credit card differ from those for a regular credit card. Here are the major differences:

• Student status: You may need to prove your enrollment in a two- or four-year college or show that you will start within the next three months.
• Income: According to the Credit CARD Act of 2009, applicants aged 18 to 21 must show independent income or use a cosigner. However, cosigners are less common now, and student cards often accept grants, scholarships, or allowances as income.
• Credit score: Student credit card issuers understand that students may not have extensive credit histories. Therefore, these cards may require only fair credit or no credit score at all.

Other Ways for College Students to Build Credit

If a student credit card isn’t an option or doesn’t appeal to you, consider these alternatives:

• Secured credit card: These cards require a cash deposit that typically becomes your credit limit, making them easier to qualify for.
• Become an authorized user: Ask a friend or family member to add you to their account. You’ll benefit from their credit history without being legally responsible for payments.
• Try Experian Go™: This service helps you establish a credit report and get credit for bills you already pay, such as cellphone, utility, rent, insurance, and streaming services.
• Make student loan payments on time: Timely student loan payments can significantly improve your credit score.

FAQ

• Do Student Credit Cards Build Credit? Yes, they can help build your credit history.
• How Long Can You Have a Student Credit Card? You can typically keep a student credit card as long as you meet the issuer’s requirements.
• Who Can Apply for a Student Credit Card? Generally, students enrolled in a two- or four-year college can apply.
• Can You Get Approved for a Student Credit Card Without a Job? Yes, but you may need to show other sources of income like grants or scholarships.

The Bottom Line

If you’re ready to use credit for the first time, a student credit card is a worthwhile option to consider. They are generally easier to obtain and carry less risk due to lower credit limits. Regardless of the type of credit card you choose, always make payments on time and keep your spending low to build a strong credit history.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make informed financial decisions.

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