Credit Cards for Students with Bad Credit: Requirements and Options

College is a period of preparation, where you gain knowledge, skills, experience, and credentials to help you succeed. A student credit card can help you take important steps toward long-term financial stability. However, simply being enrolled in college won’t necessarily qualify you for a student credit card, especially for the cards with the best rates and rewards. If you’re a student with a low credit score, there may be some credit options available to you.

Understanding Credit and Its Importance

Many of life’s most crucial investments and decisions revolve around your credit: From auto loans to mortgages, the major purchases in your future will be influenced by your credit report. A student credit card allows you to build a solid credit history, demonstrating you can borrow responsibly and repay in a consistent and timely manner. As you use and pay off your student credit card, your activity will be reported to major credit bureaus, who use this information to calculate your credit score. If you prove you’re a responsible borrower, you can expect your score to incrementally improve. A good credit score will increase your chances of getting approved for other kinds of loans and lead lenders to offer you better interest rates. Accordingly, building your credit while in school can help you save money in the coming years, allowing you to pay less in interest charges on a range of major purchases.

The Chicken-and-Egg Dilemma of Building Credit

For students and many other young borrowers, building credit involves a chicken-and-egg dilemma: To improve your credit score, you need to borrow and repay responsibly. But to get approved for any kind of credit card or loan, you typically need an established credit history. Student credit cards are a great solution to this conundrum because they’re intended for folks who don’t have lengthy borrowing histories. Most of these cards have less demanding credit score requirements to qualify, and some don’t require you to have any credit history at all.

Credit Cards for Students with Bad Credit

Very few student credit cards accept applicants with bad credit scores, usually requiring limited credit or better for approval. But there are other credit cards for students with bad credit to use instead - most notably, secured credit cards. Secured cards tend to have low fees, and the refundable security deposit you must place doubles as your credit limit, ensuring you won’t get in over your head.

Students who are 18+ years old with enough income to cover monthly bill payments are eligible for a credit card, in general. Bad credit, not age, is the complicating factor here. Using one of the best credit cards for students with bad credit responsibly is one of the easiest ways to rebuild your credit because information about your usage will be sent to your major credit reports each month. That means on-time payments and low credit utilization will lessen the impact of the negative information already there. Your goal in comparing options for bad credit student credit cards should be finding the card with the lowest annual and monthly fees.

Read also: College Credit Explained

Rewards and Perks of Student Credit Cards

Rewards credit cards offer financial advantages and other perks to attract borrowers and encourage spending. Student credit cards are no exception, and their rewards programs are usually designed to appeal to college students in particular. Each student credit card offers its own reward structure, so it’s important to compare these benefits when choosing which one you want. Others use a “points” reward structure, allowing you to apply the points you earn to make purchases. Frequently, bonus points are awarded for spending in specific categories. Student cards often tailor rewards categories to everyday purchases for college students, such as streaming services, gas stations, grocery stores, and restaurants. Others offer cash rewards for maintaining a high grade point average (GPA).

Interest Rates and Fees: What to Watch Out For

As a result, borrowers with bad credit or limited credit histories often get relatively high interest rates, which translate to higher borrowing costs over time. However, in many cases, student credit cards offer surprisingly good interest rates to borrowers without strong credit. When evaluating credit card interest rates, though, it’s important to consider how they may vary over time. For example, some cards offer a low introductory APR but adjust to a higher variable interest rate after the initial period. This isn’t necessarily negative; in fact, it can be a valuable perk for the first few months.

Plenty of credit cards charge an annual fee, putting you on the hook for $100 or more each year. Thankfully, most student credit cards don’t charge an annual fee, a major benefit for typically cash-strapped college students.

Responsible Credit Card Use: Avoiding the Pitfalls

As with any form of borrowing, student credit cards can lead to major financial challenges if used irresponsibly. While this potential pitfall may seem obvious, many cardmembers accrue more debt than they intend - and then spend years struggling to repay it. While student credit cards often have smaller credit lines than other kinds of credit cards, you can still rack up sizable debts if you use your card indiscriminately. Beyond your responsibility to repay, outstanding debts can also pose challenges as you leave school and contemplate major purchases. Your total debts are factored into your credit score, and many lenders assess your debt-to-income ratio when evaluating you for a loan.

Understanding Compound Interest and APR

Interest calculations can seem fairly confusing, but they’re essential to understand before signing up for any card. The rates are typically variable, meaning they can change within specified limits based on an underlying market rate, such as the London Interbank Offered Rate (LIBOR). These figures also imply compound interest, a concept many Americans don’t fully understand. Essentially, compound interest means any unpaid interest is added to what you initially borrowed - and you’ll now need to pay interest on this combined total. Additionally, your purchase APR rate doesn’t apply to other kinds of account activity. Rates can also be significantly higher for balance transfers and cash advances, meaning you could pay a steep price to utilize these options. In short, interest rates can grow what you owe, expanding your debts to problematic proportions.

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A calculation representing the interest and fees you’ll pay as a percentage of the total you owe. Be sure to consider both the intro APR and the rate that follows this initial period. A fixed interest rate remains the same, while a variable rate can adjust over time.

The Importance of Self-Knowledge and Budgeting

Self-knowledge is a critical component of financial security: If you know access to credit will cause you to spend more than you should, getting any card could be a poor decision. While student credit cards can be wonderful financial tools, they’ll do more harm than good if they tempt you to spend lavishly. Before applying for any student credit card, develop a detailed budget that accounts for your income, expenses, and savings goals. It’s smart to make these calculations with an eye toward your billing cycle, ensuring you can pay off your account when it’s due each month.

Applying for a Student Credit Card: What to Expect

Once you’ve settled on the best card for you, it’s time to proceed with the application process. To do so, you’ll need to provide the card issuer some personal information, including your name, date of birth, address, Social Security number, and annual income. The credit card company will use the information you’ve provided to perform a credit check and assess whether you’re a good candidate for the card in question. It’s important to note this process typically involves a hard credit check, which can temporarily lower your credit score. While your score typically bounces back after a few weeks, each hard credit check can dent your score further.

Generally, getting approved for a credit card is a fairly rapid process: Card issuers can often let you know if you’ve been approved within just a few minutes. If you are approved, you’ll be offered final terms for your credit card agreement, including your individualized APR and credit line. It’s important to remember that you’re not obligated to proceed once you reach this stage. If the final terms you’re offered don’t work for you, you can walk away without signing a cardmember agreement.

Strategies to Improve Your Credit Score

You can help build your credit score if you manage your credit wisely with credit cards and other strategies.

Regularly checking your credit score can also be a helpful way to get a broad view of your credit behavior, especially if you begin to make changes in the hopes to help improve your score.

To help improve your credit score, consider taking some of the following steps:

Lower your credit utilization ratio to 30% or less.
Consistently make on-time payments.
Protect sensitive information (for example, shred important documents including information such as your Social Security number before tossing).

Tips for Obtaining a Credit Card with a Low Credit Score

If you recently checked your credit score and find that you fall into the poor credit score category, as referenced by some credit scoring models, you may be wondering what credit products may be available for you. Let’s dive into some potential choices below:

Research secured credit cards: Secured credit cards are like normal credit cards except that they require a cash deposit that serves as your credit limit; thanks to this, you may have a better chance of getting approved for them despite having a poor credit score. For example, a $300 deposit would typically give you a $300 credit limit. Please note that secured credit cards are not offered by Chase.
Consider adding a co-signer: Ask a family member or trusted friend/loved one to co-sign your credit card application. This may help increase your chances of approval, as a co-signer helps lower the risk for the lender. Co-signers are obligated to take responsibility for the debt if you fail to make payments.
Explore student-specific credit cards: Some financial institutions and credit unions offer credit cards designed for students who are looking to build their credit history. They may come with certain features, such as low credit requirements and fees. You may be able to benefit from rewards as well, such as cash back, as an incentive for managing your credit responsibly.

Whichever card you decide to apply for, it’s important to always review the terms and conditions so that you won’t be surprised by any fees, including annual fees, interest rates, foreign transaction fees and more.

Strategies to Pay Off Existing Debt

One of the biggest hindrances to obtaining a good credit score can be the fact that you have several large, outstanding debts. As a student, it can be difficult to figure out where to prioritize your payments. Below are a few helpful tips to pay off your debts:

Cut unnecessary costs: Find areas where you can cut unnecessary expenditures such as monthly subscriptions. This can help you find small ways to save and put those funds towards your debt installments instead.
Consider debt consolidation: Explore if consolidating multiple debts into a single payment with a lower interest rate would be helpful for you. This can help you save on interest costs and can be more manageable since you’ll only need to pay one bill.
Find additional income sources: If you have the time outside of your studies, look into side gigs such as tutoring or rideshare driving.
Apply debt repayment methods: You could try using the debt snowball method and pay off debts from smallest to largest to build momentum. Another option is the debt avalanche method, where you prioritize paying off the debts with the highest interest rates first, which can help you save money on interest costs in the long run.

Specific Credit Card Options

Here are some specific credit card options that may be suitable for students with bad credit:

Capital One Platinum Secured Credit Card: No annual or hidden fees. Using the Capital One Platinum Secured card responsibly could help build your credit. Put down a refundable security deposit starting at $49 to get at least a $200 initial credit line. You could earn back your security deposit as a statement credit when you use your card responsibly, like making payments on time. Be automatically considered for a higher credit line in as little as 6 months with no additional deposit needed. Enjoy peace of mind with $0 Fraud Liability. Monitor your credit score with CreditWise from Capital One.
PREMIER Bankcard® Mastercard® Credit Card: PREMIER Bankcard credit cards are for building credit. Start building credit by keeping your balances low and paying all your bills on time each month. Credit Limit Increase Eligible after 12 months of consistent responsible account management. They report monthly to the Consumer Reporting Agencies to help you build your credit. No security deposit, just instant purchasing power. Zero Fraud Liability.
Aspire® Cash Back Rewards Mastercard: Earn Cash Back Rewards - 3% on Eligible Gas, Groceries, and Utilities, and 1% on All Other Eligible Purchases. Up to $1,000 Credit Limit Subject to Credit Approval. No Security Deposit. Prequalify Without Affecting your Credit Score. Reported to all 3 Bureaus. Free Access to your Credit Score. $0 Fraud Liability.
Milestone® Mastercard® - $1,000 Credit Limit Guaranteed: $1,000 credit limit if approved. Zero Fraud Liability. No security deposit, and a path to better credit.
Indigo® Mastercard® - $1,000 Credit Limit: Get the credit limit you deserve-$1,000 guaranteed if approved. Zero Fraud Liability. No security deposit, just purchasing power.
Earniva® Business Mastercard for Less-Than-Perfect Credit: Get a guaranteed $700 credit limit if approved! Business credit card for those with less than perfect credit. Available to Gig Workers, Contractors and other small business owners.
FIT Mastercard: The FIT Mastercard is ideal for people looking to rebuild their credit. Unsecured credit card requires No Security Deposit. Perfect card for everyday purchases and unexpected expenses. Monthly reporting to the three major credit bureaus. Use your card everywhere Mastercard is accepted. Enjoy peace of mind with Mastercard Zero Liability Protection for unauthorized purchases.
First Progress Prestige Secured Mastercard®: Turn Your Tax Refund into a Credit Building Opportunity! Make Everyday Purchases = Get Rewarded. Make Payments = Get Rewarded. Now offering Up To 10% Cash Back at select merchants with First Progress! Plus, 1% back when you make payments! Apply with no impact to your credit! All credit types welcome to apply! Build your credit history across 3 major credit reporting agencies: Equifax, Experian and TransUnion. Cardholders who keep their balance low and pay their credit card bill on time every month typically do see an increase in their credit score.
Reflex® Platinum Mastercard®: Up to $1,000 Initial Credit Limit. The Reflex Mastercard is ideal for people looking to rebuild their credit. Unsecured credit card requires No Security Deposit. Perfect card for everyday purchases and unexpected expenses. Monthly reporting to the three major credit bureaus. Use your card everywhere Mastercard is accepted. Enjoy peace of mind with Mastercard Zero Liability Protection for unauthorized purchases.
First Progress Select Secured Mastercard®: Put Your Tax Refund to Work - Earn Up To 10% Cash Back on everyday shopping with your First Progress Card, plus another 1% back on payments! Apply with no impact to your credit! Secure your credit line with your refundable security deposit - choose from $200- $2,000 - with the ability to increase up to $5,000 over time! Choose the First Progress Select Card for a lower annual fee! All credit types welcome to apply! Build your credit history across 3 major credit reporting agencies: Equifax, Experian and TransUnion. Cardholders who keep their balance low and pay their credit card bill on time every month typically do see an increase in their credit score.

Alternatives to Traditional Student Credit Cards

Upgrade Card: While not strictly a card for students, the Upgrade Card is an intriguing option for those with lackluster credit (of 600 or more) who want to establish solid repayment habits. The Upgrade Card provides a specific loan term and set monthly payments to predictably pay down your balance. There are no late fees for this card. No international transaction fees if you plan to travel abroad.
Jasper: Jasper takes a different approach from its competitors. You start out earning just 1% cash back, but for each friend you refer, you’ll both get another 1% for the year. Jasper also doesn’t require a social security number, making it perfect for international borrowers attending school in the states. Your cash back is automatically used as a statement credit every three months, so you don’t the option to spend it elsewhere. Get between 1 and 6% cash back, depending on how many friends you successfully referred over the last year.
Petal 2: If you like Petal’s approach to assessing creditworthiness but weren’t wowed by the Petal 1 card, it’s successor could be your perfect match. The Petal 2 does away with late fees, adds a consistent cash-back structure, and maintains valuable features such as the ability to automate payments. Petal analyzes your banking history to assess your credit-worthiness. For students with little or no credit history, this approach offers a valuable opportunity to begin building credit. The card gives 2% to 10% cash back on purchases from select merchants, and its autopay feature can help you stay on track.
Sallie Mae Evolve Card: While similar to the Accelerate℠ card, Sallie Mae’s Evolve card has a distinct twist: Each month, you automatically get a 25% boost on rewards cash in your two top spending categories (such as groceries or gas). For students who spend big in a few categories, that perk will add up.

Specific Student Credit Card Options for Comparison

Discover it® Student Chrome: College students have a lot on their plates, so the Discover it® Student Chrome card makes it simple to earn cash back consistently. Between an intro APR of 0% and a cash-back match at the end of your first year, this card’s benefits are substantial and straightforward.
Discover it® Student Cash Back: Like Discover’s Student Chrome Card, the Student Cash Back card offers an impressive combination of initial perks and cash-back rewards. In fact, the Student Cash Back card offers even greater opportunities to earn - if you’re willing to get strategic about rotating spending categories. Discover will match the cash back you’ve earned at the end of your first year. Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Get an unlimited dollar-for-dollar match of all the cash back you earn at the end of your first year, automatically.
Journey Student Rewards Card from Capital One: With a total cash back rate of 1.25% (if you pay on time), the Journey Student Rewards Card has the edge on cards with a 1% basic cash-back rate. But the high APR should give you pause, and other cards offer better intro benefits. Earn 1% cash back on purchases, and get an extra 0.25% when you pay on time.
Deserve® EDU Mastercard for Students: Deserve® EDU Mastercard for Students may seem unremarkable, with 1% cash back on all purchases and few appealing intro perks. But the card is a great choice for those without credit history or international students who don’t have a Social Security number that other card issuers require. Get a free year of Amazon Prime Student if you spend $500 or more in your first three billing cycles. No international transaction fees if you plan to travel abroad.
Bank of America Customized Cash Rewards credit card for Students: With best-in-class cash-back rates and an attractive 15-month 0% APR offer, this card would seem highly desirable to college students with a strong credit score. A current $200 bonus for spending $1,000 or more in the first three months makes the Customized Cash Rewards card hard to beat.
Bank of America Travel Rewards credit card for Students: Like BOA’s Customized Cash Back Card, this travel card offers great perks for college students with strong credit scores. From a year with 0% APR to its solid rewards structure, this card provides enticing incentives - including a big bonus for spending $1,000 in the first three months.
Sallie Mae Accelerate℠ card: Sallie Mae’s Accelerate℠ card is particularly tailored to those paying down student loans, offering a 25% boost to your payments when you use rewards cash for this purpose. The card also offers a good cash back rate overall and a nice 15-month 0% APR period for students with good credit.
Wells Fargo Active Cash℠ Card: Offering 2% cash back on purchases, a lengthy 0% APR period, and an appealing intro reward bonus, the Active Cash℠ card seems almost too good to be true. However, you’ll need good credit to qualify for this card, and you won’t have the option to utilize a co-signer.

Quick insights

If you’re a student with a low credit score, there may be some credit options available to you. You can help build your credit score if you manage your credit wisely with credit cards and other strategies. It’s important to research the terms and conditions of any card you apply for so you can protect yourself from surprise fees and bad terms. Being a student and managing a full courseload can be stressful by itself, but it can be even more overwhelming adding your financial situation into the mix. Your report will show you, among other details, what credit accounts you currently have open (and ones that have been closed) and if there are any negative marks on your report, such as defaults on loans or missed credit card payments. Identify the factors affecting your score: Look for common contributors like late payments and a high credit utilization ratio. These can negatively impact your credit score, so being aware of these factors can help you adjust your current credit behavior. Calculate your debt-to-income ratio: Total up your monthly debt installments and divide this by your gross monthly income to see how much of your income goes towards debt. The lower your debt, the better your ratio and potential chances for approvals for lines of credit.

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