Even if you know that student credit cards are designed for the needs of college students, you may still wonder about the advantages of using them.
Here, we’ll explore the various benefits of student credit cards and how they can help you build a solid financial foundation.
Building a credit history early
One of the most significant advantages of having a student credit card is the opportunity to build your credit history early. A credit history is essential for future financial activities, such as applying for loans or renting a home or apartment.
Emergency funds
While a student credit card likely shouldn’t be your first option when handling emergency expenses, it can help give you some extra flexibility when paying for urgent costs.
If you use a student credit card for emergency funds, you should always have a plan to pay off the balance as soon as possible. Remember that you’ll need to make at least the minimum payment on your statement balance by the due date to avoid incurring any late fees or potential damage to your creditworthiness.
Building creditworthiness
Using a student credit card responsibly – keeping your balance low and paying off your credit card’s bill on time – can help you build your creditworthiness. A positive credit history may help you secure more favorable rates on loans or qualify for credit cards with higher limits after you graduate.
Access to digital tools and online education
Student credit cards often come with user-friendly digital tools and mobile apps. These tools allow you to track your spending, monitor your account balance and set up automatic payments. Managing your credit card account through these digital platforms may make it easier to stay on top of your finances and avoid late payments or overspending.
Many student credit cards also offer access to online educational resources. These may include budgeting calculators, credit score monitoring and financial literacy articles. Using these resources can help you make informed financial decisions and develop sound money management habits.
Opportunity to upgrade your card
If you manage your card responsibly and don’t close your account, some issuers may let you upgrade your student card to a standard credit card after graduating. Keeping your student card open after an upgrade means keeping one of your older credit accounts. This improves your average age of accounts and, provided you don’t carry a large balance on this card, keeps your credit utilization low. Both of these factors can help you build your creditworthiness.
Should I get a credit card as a student?
A student credit card can be a step toward greater financial independence. By managing your own credit card account, you can gain experience in handling credit and budgeting. This can prepare you to take on more financial responsibilities, such as managing rent and utilities.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
