Student Finances How to Use a Student Credit Card Successfully Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Zina Kumok Published Sep 30, 2019 - [Updated Jan 31, 2022] 5 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. Signing up for a student credit card probably sounds exciting. After all, for most students, it’s the first chance to open a line of credit – well, besides the student loans they took out. But as tempting as it might be to take that new card for a spin at the nearest mall or treat your friends to brunch, the true purpose of a student credit card is to encourage young people to build their credit score. That can only be done through responsible, consistent use. If you’ve just signed up for a student card, here’s what you need to know about using it successfully. Use it for Small Recurring Bills Part of what determines a credit score is the credit utilization percentage, or how much available credit you’re using. If you have a credit card with a $200 limit and carry a $100 balance, you’re using 50% of the card’s credit line. It’s best not to leverage more than 30% of your credit limit or your credit score will be dinged. Most student credit cards have a small credit limit, so it can be easy to go over. If your card has a $1,000 limit, spend no more than $300 on the card during the billing cycle. The easiest way to stay under the recommended limit is to only use the card for one or two small recurring bills. A subscription service like Hulu or Spotify is an easy way to do this. Just link your card to the account and stash it away somewhere safe. Make Automatic Payments The most significant element in determining your credit score is whether you pay your bills on time. This accounts for 35% of your total FICO score. If your student credit card bill is paid on or before the due date every month, your credit score will increase. Paying on time can be hard for a busy college student, especially if you choose manual payments. The simplest solution is to schedule automatic payments from your bank account. You can decide to pay the entire statement balance or the minimum payment. Paying only the minimum will cause interest to accrue, but it won’t hurt your credit score. If you can afford it, always pay the statement balance in full. Make sure you have enough money in your bank account to pay your credit card bill. If your bank account doesn’t have sufficient funds, you’ll be charged a returned payment fee. You may also owe a late fee and penalty interest fees. You can choose to pay the minimum automatically every month and then pay the rest manually to avoid an overdrawn checking account. Choose Paperless Statements Credit card providers send monthly statements outlining your charges, minimum payment, due date and available credit limit. The statement can be sent through the mail or electronically. Many security experts recommend getting electronic statements to avoid having a paper statement stolen and used to hack into your account. If you choose paperless statements, make sure you still read the statement every month. Check Your Bill Regularly Even if you only use your student credit card for your Netflix subscription, it’s still a good idea to check the card activity every week or so. Credit cards can be hacked and it’s better to discover fraud sooner rather than later. Create a calendar event or reminder in your phone to look at your bill. If you see something you don’t recognize, call the card provider immediately. If you lose your card, cancel it right away and get a replacement card. If you don’t cancel a card after it’s used fraudulently, you may be held liable for up to $50 in purchases. It’s also a hassle to call and dispute purchases individually. Avoid Using the Card Having a credit card makes it easy to spend money without realizing you’re going over budget. One study found that people may spend up to 100% more when they use a credit card instead of cash. One way to avoid this pitfall is to simply leave your card at home. If you’re going grocery shopping or out with your friends, bring cash and only take as much as you’re willing to spend. Take Advantage of Credit Card Rewards Some student credit cards offer extra rewards and perks you can’t find with a debit card. For example, the Discover it Student Cash Back card offers a $20 bonus if you have a 3.0 GPA or higher. Other rewards can include cash-back, travel insurance or no foreign transaction fees. These can be a lifesaver if you’re traveling abroad or going on spring break. Track Your Credit Score After you start using your card, you can track your credit score progress through the Mint app. Some card providers also have their own credit score monitoring system. It can take as little as a few months to see a huge bump in your score, especially if you employ the habits listed above. Monitoring your credit score will also keep you abreast of any problems, like identity theft or a bill sent to collections. Having a good credit score will help you immensely after graduation. You’ll be able to get an apartment without a co-signer, refinance your student loans or sign up for utility services without a down payment. You may even be able to upgrade to a better rewards credit card with exclusive travel or cash-back perks. Keep the Card Open It may seem logical to cancel your student credit card once you’re no longer a student, but you don’t have to be in college to maintain a student credit card. Closing the card may also hurt your credit score, especially if you have no alternative forms of credit. Instead, keep the card open and use it every month. Use the strategy mentioned above and keep a small recurring bill on the card. The average age of your credit accounts makes up 10% of your FICO credit score. If possible, keep the card open as long as possible to build a healthy score. Previous Post The Ultimate Guide to Taking Your Dream Gap Year Next Post How to Build an Emergency Fund in College Written by Zina Kumok Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Conscious Coins. More from Zina Kumok Visit the website of Zina Kumok. Browse Related Articles Mint App News Intuit Credit Karma welcomes all Minters! Retirement 101 5 Things the SECURE 2.0 Act changes about retirement Home Buying 101 What Are Homeowners Association (HOA) Fees and What Do … Financial Planning What Are Tax Deductions and Credits? 20 Ways To Save on… Financial Planning What Is Income Tax and How Is It Calculated? 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