While COVID-19 is putting a pinch in college plans for many students this fall, as your children grow older, building credit becomes an important life lesson, regardless of if they are attending college in-person this fall, or will be taking their freshman year coursework remotely.
Student credit cards are typically designed for young adults that are between 18 to 21 years old and have limited or no credit history.
What Features Should You Look For In Student Credit Cards?
As many know, there are a variety of credit cards out there and it can be hard to choose which credit card may be the right fit for you.
If you meet the basic requirements, then your main goal with a student credit card is to establish a credit history. Some of those basic requirements include proof of income if you are under 21 or a co-signer, so mom and dad… You may need to assist.
At this stage in a student’s credit-building life, don’t get too hung up on rewards and perks, which can be a nice added bonus, but really shouldn’t drive the purpose, which is building a solid foundation of responsible credit card use.
Here are a few of the must-haves for a good student credit card to include:
No annual fees
If a card is out there to build your young adult’s credit history for the long-term, stay away from cards that are carrying annual fees. Students are on student budgets, so they only should need the basics. They don’t need the latest and greatest rewards cards filled with benefits and as a perk, they can carry their starter credit card for many years to preserve the length of their credit history, which will also benefit their credit scores.
No foreign transaction fees
At some point in college, the COVID-19 pandemic will hopefully subside and your student will have a chance to travel abroad. Some credit cards charge foreign transaction fees, usually 1% to 3% of the transaction, on purchases made in a foreign currency. If this is likely in your student’s plans, or even travel abroad without the studying, then find a card that will let you skip these foreign transaction fees.
Reporting To All Three Credit Bureaus
The point of getting this student credit card is to build credit as a student and the key to that is ensuring that the credit card use is reported to the three major credit bureaus, which are TransUnion, Equifax, and Experian. The better your credit scores, the better opportunities your student will have when it comes time for mortgages, loans, or other financial needs as they grow older. It is important that your student also understands the power of the credit card and its use, including how a little damage can go a long way when it comes time to purchase a home, even though it seems far off to them now.
What Student Credit Card Is Best For Me?
Now that your children are spreading their wings and heading to the next chapter of their life, it helps to work with them to determine whether they are ready for the responsibility.
Here is a guide to various student credit cards that could be a match for your student: