Tips for getting & using a credit card in college

Credit card 101: Applying for a credit card as a college student

Class is in session! As a college student, do you know the best way to get - and use - a credit card? It's ok if you're new to the world of credit: we're here to help.

• Benefits of credit cards for college students
• Applying for a credit card as a college student
• Credit card tips for college students
• Why college students should have credit cards

Benefits of credit cards for college students

Credit cards can be a valuable tool for spending and budgeting - as long as you use your card responsibly. Spending recklessly on a credit card can cost you a lot in interest and may result in your credit score taking a hit.

If you commit to responsible credit behavior, a credit card delivers the following benefits:

• More financial flexibility. Unlike paying with cash or a debit card, credit cards let you repay over time. If you make a purchase on a credit card, you have until the statement due date to pay what you owe without accruing interest.
• Protection against fraud. Credit card issuers can't hold you liable for purchases made to your card without your consent - as long as you notify them promptly if your card goes missing. Some cards even offer one-time-use "virtual" card numbers so you don't have to share your real card information with merchants.
• Rewards and perks. Certain credit cards offer rewards like cash back, hotel points or airline miles. Higher-end cards may even include features like concierge services.
• The chance to build credit. Your credit score might not matter much to you now, but a good score will provide you with more options in the financial marketplace in the future. Plus, some landlords and employers will check your credit score to assess how responsible you are with money. A good score will put you in their good graces.

Applying for a credit card as a college student

Apply for a traditional card

Traditional credit cards have many upsides however Congress made it harder for college students to get a conventional card when they passed the 2009 Credit CARD (Card Accountability, Responsibility and Disclosure) Act.

The act requires that people under 21 can only get a credit card if they:

• Can demonstrate the ability to pay back any charges they incur; or
• Have a co-signer who is over 21 and has the ability to make payments.

If you can show that you have sufficient income or a trusted co-signer, a traditional credit card may be a good choice for you.

Apply for a secured credit card

A secured card works just like a traditional card when it comes to making purchases. It's the application process that's different: You need to make a deposit that will serve as collateral.

Your secured card's limit will be no larger than this deposit, which may limit your ability to make big purchases with the card. But secured cards are available to people as young as 18. Since they require collateral, they may have a higher approval rate for those with bad or no credit. Not all banks or credit card companies offer secured credit cards, so be sure to do research on which cards might be available to you.

Become an authorized user on another person's card

Authorized users are typically a cardholder's family members. But anyone can become an authorized user on another person's credit card: That person simply has to contact their card issuer and make the request. If it's approved, the user will receive a card in his or her name.

The real benefit to becoming an authorized user is that it can help build your credit. Some, but not all, card issuers report authorized users' payment histories to the credit reporting agencies.

Open a joint credit card account

Becoming a joint cardholder is similar to getting added as an authorized user, with one key difference: Every cardholder on a joint account is legally liable for the card debt.

In addition, joint credit card account activity is guaranteed to show up on your credit report. If you find a joint account holder with excellent credit, you can take advantage of their credit history to get better terms than you might otherwise be able to. Keep in mind that joint credit card accounts are not commonly offered by banks or credit issuers and you are more likely to find cards that allow you to have authorized users.

Credit card tips for college students

Credit is a powerful financial tool: giving you fraud protection, the ability to make purchases that you might not be able to afford in cash. Plus, some credit cards offer opportunities to earn cash back or other rewards.

Yet like any tool, credit can be misused. Be smart about shopping for and using a credit card to stay out of financial trouble and support a good credit score.

Keep the following in mind to get the most out of a credit card and maintain your financial health:

Shop around to find the card that fits your needs.

There are dozens of different credit cards available to college students. You may find searching through credit cards confusing but take the time to do your research and find the absolute best card for you. And be sure you read your top-choice cards' terms and conditions closely before you apply.

Only apply to the card(s) you are confident you want.

Every time you submit a credit card application, the card issuer will order a copy of your credit report. Many of these requests in a short time frame can negatively affect your credit score - so keep your applications to a minimum. Requesting pre-approval for a credit card does not guarantee that the applicant will be approved. However, requesting a pre-approval will not hurt your credit score.

Keep your card spending within your budget.

Perhaps the most important credit tip is to stay on top of your spending. When you're making purchases with a card swipe, as opposed to paying in cash, it can feel like you're playing with house money. But this is how you get into trouble: instead, treat card spending like paying with cash or a check. In addition, consider using your card issuer's mobile app to track your spending and stay within your budget.

Check your credit report regularly.

You are entitled to one free credit report annually from each of the Credit Reporting Agencies (Equifax^®, Experian™ and TransUnion^®). You can order your report from all three CRAs at the same time — or pull a single report every four months. Whichever option you choose, commit to checking your credit report regularly to monitor for any suspicious activity.

Why credit cards could be beneficial to college students

For college students, credit cards offer financial flexibility and a way to build credit. Still, having a credit card is a big responsibility. It's important to treat credit carefully: conduct research to find the card you want, understand how card spending fits into your overall budget and use credit at a level you can afford.

If you make a habit of paying your bills on-time, you can build a strong credit history for your future. When you pay off your entire credit balance every month, you can avoid interest charges and use category spending (such as gas or groceries) to earn cash back and rewards points from credit cards with perks.

Your first lessons in credit can last you a lifetime, opening up a credit account can help you graduate into the real world with a responsible credit history to last a lifetime.