Credit Card Application Requirements for Students: A Comprehensive Guide

For students navigating the world of finance, credit cards can be a valuable tool for building credit history and managing expenses. Student credit cards, in particular, are designed with the unique needs and circumstances of college students in mind. This article provides a comprehensive overview of the requirements for student credit card applications, including income considerations, eligibility criteria, and tips for responsible credit card use.

Understanding Student Credit Cards

Student credit cards are specifically tailored to help college students build a credit history in a low-risk environment. They often come with features like lower credit limits, introductory APR promotions, balance transfer offers, and access to credit scores. These cards are designed for students with little to no credit history and aim to suit their unique financial situations, even those with no income.

Student Credit Cards vs. Regular Credit Cards

The primary difference between student credit cards and regular credit cards lies in the application criteria. Banks and credit card companies understand that younger individuals, such as college students, may not have had sufficient time to establish their own credit. Consequently, student credit cards often have lower eligibility requirements than standard credit cards.

Benefits of Student Credit Cards

Potential as a credit-building tool: Student credit cards offer an excellent opportunity for borrowers to establish their credit history while still in school.
Lower eligibility requirements: They are generally easier to qualify for than traditional credit cards.
Specialized rewards: Some student credit cards offer rewards programs tailored to benefit students, such as cash back on purchases at gas stations, restaurants, or bookstores.
Low fees: Student credit cards will typically have low service fees.
0% intro APR: A student credit card may have higher interest rates than regular credit cards, but you may benefit from a lengthy 0% APR introductory offer. During this 0% APR introductory period, interest is not applied on purchases made until your regular interest periods begins.

Potential Risks

Like any credit card, student credit cards come with potential risks:

Lower credit limits: Student credit cards often have lower credit limits, which may restrict spending.
Higher interest rates: They may have higher interest rates compared to some traditional credit cards.
Limited duration of benefits: Some benefits, such as introductory APRs, may have a limited duration.

Income Requirements for Student Credit Card Applications

One common question among students is whether they need income to qualify for a student credit card. While some credit card issuers require proof of income, the good news is that the income doesn’t necessarily need to come from a job. Student credit card applications require information about your income as an indicator of your ability to pay your debts on time, which impacts the types of credit cards and interest rates you may be eligible for.

Read also: College Credit Explained

What Counts as Income on a Student Credit Card Application?

It's important to understand what counts as income when applying for a student credit card. Here are some acceptable sources of income:

Earnings from employment: If you're eighteen or older and work part-time or full-time, you can count earnings from your job, including tips and bonuses. You can also include pay from freelance work and other irregular sources of income.
Student allowance or deposit of funds from a parent: All student applicants eighteen or older can include a monthly student allowance or deposit of funds from a parent as income. You'll need to ensure that any financial support you receive goes directly into a bank account in your name to qualify as personal income.
Spouse or partner income: If you’re twenty-one or older, you can include spouse or partner income along with your own to qualify for a student credit card.
Grants and scholarships: Claiming grants and scholarships as income is generally allowed.
Financial aid: Students can list leftover financial aid as their income on a credit card application.
Regular bank deposits from family members: In addition to income from a job, regular allowances or bank deposits received from parents or family can count toward income. As long as monthly bank statements prove there’s money being deposited into an account, they’re valid as income on a credit card application.

When applying for a student card, make sure to add up all sources of funds received and enter them in the application where it asks for income.

What Doesn't Count as Income?

It's equally important to know what doesn’t count as income on your student credit card application. For instance, if you’re under twenty-one you can only report your own independent income or assets. Also, a student can't use their parent's annual income, unless they are a cosigner.

The CARD Act of 2009

The CARD Act of 2009 stipulates that borrowers aged eighteen to twenty must prove they can independently pay back their debt to get approved for a student card without a cosigner. This means students can't use their parent's annual income unless the parent is a cosigner.

Income Requirements Based on Age

Applicants under 21: Students under 21 must demonstrate independent income or assets to show they can repay any credit extended, unless they have a co-signer over 21, such as a parent or guardian, who agrees to accept joint liability for the account.
Applicants over 21: Students over 21 are subject to less stringent requirements. They can include income from shared household income when applying for a credit card.

While there’s technically no minimum income threshold for obtaining a credit card, having a higher disposable income can improve the chances of approval and result in a higher credit limit.

Read also: Credit Union in Borger

The Role of a Cosigner

Credit card companies don’t require applicants twenty-one and older to have a cosigner. Adults younger than twenty-one who prove they can independently repay their debt typically won’t need a cosigner either. But if borrowers eighteen to twenty years old can't provide enough proof of income, a cosigner's income may count on a student credit card application.

Cosigners are often parents, but they don’t have to be. Guardians, aunts and uncles, friends, and even spouses can be cosigners-as long they meet the credit and income requirements. Being a cosigner means more than just adding your name to an application-it’s a legal agreement. Creditors use the co-signer's credit history to approve the student account. The co-signer then acts as additional insurance for the card.

How to Apply for a Student Credit Card

Applying for a student credit card is similar to applying for a traditional credit card. Here are some steps you can take to prepare and increase your chances of approval:

Check your credit: Even without a credit history, it can be helpful to know where your credit reports and scores stand. CreditWise from Capital One can help. You could also visit AnnualCreditReport.com to get free copies of your credit reports.
Gather your documents: It can be useful to have your personally identifiable information ready to go, including your Social Security number (SSN), proof of income and college enrollment details. Obtain relevant proof that you are enrolled in school.
See if you’re pre-approved: Seeing whether you’re pre-approved can give you an idea of your chances, without affecting your credit scores.
Submit your application: Credit card applications are fairly straightforward. The time it takes to get a decision on your application can vary. Some card issuers provide instant approval or rejection, while others can take weeks before making a decision.

Alternatives to Student Credit Cards

If a student is unable to qualify for a student credit card, there are alternative options to consider:

Apply for a secured credit card: Secured credit cards are approved for a predetermined cash amount paid upfront by the cardholder, and that payment becomes the card’s credit limit. Cardholders can build a positive credit history by using the card to make purchases and paying off their monthly balance.
Become an authorized user: Parents or other family members can add someone as an authorized user to credit card accounts. This is a great way for students to piggyback on someone’s good credit history as a way to start building their own.
Get a co-signer to sign the application: Asking a parent or other responsible family member to co-sign a credit card application can be a way to make approval more likely.

Responsible Credit Card Use

If you're considering a student credit card, just remember: The most important thing is to use your new card responsibly. Don't spend more than you can reasonably pay back and aim to make your debt payments on time, whenever possible.

Here are some tips for responsible credit card use:

Spend below your credit limit: Spending below your credit limit is an important part of building credit. Start by using your credit card for relatively small and predictable purchases, like a streaming subscription.
Pay your bill in full every month: Even with a 0% introductory offer, the best thing you can do is to get in the habit of paying your credit card bill in full every single month.
Avoid cash advances: Cash advances often come with high fees and interest rates.
Monitor your credit card activity: Mobile banking apps are helpful when it comes to using your credit card responsibly and staying on track. Apps make it super easy to keep track of your purchases, pay your credit card bill, check your FICO® Score, and more.
Choose a card with no annual fee: If you’re new to building credit and looking for a student credit card, make sure you choose a card with a $0 annual fee.

Examples of Student Credit Cards

Several financial institutions offer credit cards specifically for college students. Here are a couple of examples:

Discover it® Student Cash Back: Lets you earn 5% cash back on everyday purchases at different places you shop each quarter, up to the quarterly maximum when you activate.
Discover it® Student Chrome card: Lets you earn 2% Cashback Bonus® at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically.

What Happens After Graduation?

After you qualify for a student credit card, you’ll be on your way to establishing credit, earning cash rewards, and more. But what happens when you graduate? Some credit card issuers will instantly convert your student credit card to a regular credit card, with no additional income requests or actions taken by you. With responsible use, a student credit card is a useful tool for building a good credit history that will serve you well after you earn your degree.

Common Misconceptions

There’s a persistent myth about credit-some people think you need to carry a balance month to month to build your credit. That is FALSE!

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