Credit card tips for college students

Opening your first credit card is a big step toward building your financial future. And if you’re a college student figuring out credit for the first time, you might need some tips on where to start. 

Using a credit card in college is less about what you can buy and more about what you can build for the future. Here are a few credit card tips for college students to help you find the right card, use it responsibly and create healthy financial habits early. 

When you’re shopping for a credit card—whether you’re in college or not—it’s important to find the right card for your needs. 

You can start by comparing cards and learning about their terms, fees, interest rates and more. And if it feels overwhelming, talking to a qualified financial expert is a great place to start, too. 

You might want to look into credit cards that are specifically designed for college students. Capital One has credit cards created with college students in mind.

When considering student credit cards, here are some important things to think about:

• Annual percentage rate (APR): A low introductory APR can be enticing, but find out where the APR will go from there.
• Additional fees: Are there annual fees, transaction fees or other charges?
• $0 liability for unauthorized charges: A credit card is a big deal—and an even bigger deal if it’s lost or stolen. Find out if you’re covered by policies like $0 liability for unauthorized charges.*
• Automated payment reminders: Automated texts or emails can alert you when your account needs attention. And that means you can stay focused on school.
• Foreign transaction fees: Some cards cover foreign transaction fees, a bonus for students heading abroad for a semester or the summer.
• Rewards: Many entry-level student cards offer cash-back rewards, often with no limit on the amount that can be earned.

It’s a good idea to apply only for the credit you need, whether you’re new to credit or not. If you’re a first-time cardholder, having multiple credit cards might make it hard to keep track of spending and payments. 

It’s also important to know how credit card applications might affect your credit score. Credit applications typically trigger a hard inquiry into your credit. And multiple hard inquiries in a short period of time could hurt your score, according to the Consumer Financial Protection Bureau (CFPB).  

As far as credit card usage tips go, making on-time payments is a big one. When you make a late credit card payment—or miss a credit card payment altogether—it can have negative effects on your finances in a few ways.

First, you might be charged a late fee for missing a payment. And if you pay your bill on time but pay less than the minimum amount due, you might still be charged a late fee.

Second, late payments can hurt your credit, according to the CFPB. Negative factors like late payments might show up on your credit report for years. And while the exact impact of late payments is hard to predict, payment history is a factor used to determine your credit score.

And when a credit card account goes 180 days—a full six months—past due, the credit card issuer must close and charge off the account. This means the account is permanently closed and written off as a loss to the company. But the debt is still owed.

You might consider setting up automatic payments to ensure you don’t miss a payment due date. You could also use email reminders or calendar alerts to remind yourself. 

If you’re having trouble making payments, contact your credit card company as soon as possible, because they might be able to work with you.

The CFPB says that paying your balance in full every month can help your credit score. 

If you don’t pay your credit card balance in full every month, the unpaid portion carries over to the next month. That’s called a revolving balance. And you might continue to be charged interest on your revolving balance until your account is paid in full.  

As the CFPB explains, “A credit card’s interest rate is the price you pay for borrowing money.” And the higher your revolving balance, the more interest you might be charged. Paying your balance in full every billing cycle can help you pay less interest. And if you can’t pay the full balance, the CFPB recommends paying as much as you can. 

Keeping your spending under control is credit card 101 for college students.

If you’re having trouble keeping track of spending, you can even use your credit card to help you create a budget. A budget might help you get a handle on your finances and work toward a savings goal.

You should also think about your credit utilization ratio. Credit utilization is a measure of how much of your available credit you’re using. The CFPB recommends keeping your credit utilization below 30% of your available credit. So if your only line of credit is a credit card with a $2,000 limit, that would mean keeping your balance below $600.

A low credit utilization ratio could be a sign that you’re using your credit card responsibly and not overspending. And according to the CFPB, that could help you keep a good credit score or even improve your score.

While you’re working to build credit in college, it’s important to track your progress and know where you stand.

CreditWise from Capital One lets you keep an eye on your credit as often as you want. How does CreditWise work? It gives you access to your TransUnion® credit report and VantageScore® 3.0 credit score from your desktop or your phone. It’s free for everyone, it won’t hurt your score to use it and you don’t even need to be a Capital One customer to enroll. 

You could also get a free copy of your credit report from each of the three major credit reporting bureaus. Visit AnnualCreditReport.com to learn how. 

Building good credit takes time. But with responsible use, you might be able to start while you’re in college. That way, you can set yourself up for a bright financial future when you graduate.