Student credit cards are often an excellent first foray into the world of credit, making many eager to get their first card. Cards geared toward college students often have low credit limits and no annual fees, helping students begin their credit journey on the right foot. Some even offer cash back and travel rewards.
“Many credit cards marketed to students are linked to partnerships between card issuers and colleges, alumni associations or campus organizations,” says Hardik Patel, founder of Trusted Path Wealth Management, in Santa Rosa, California. Patel says these “college affinity cards” often have school branding and may feature incentives.
However, qualifying for your first credit card can be challenging. You may have limited or no credit and a minimal employment history to show that you are a dependable borrower. One way you can qualify is by meeting student credit card income requirements. Here’s what you need to know about these requirements and how to meet them.
[READ: Best Credit Cards for Students]
Why Income Matters for Credit Cards
Generally, your credit score is one of the most important factors when applying for a credit card. Income is also a significant consideration, especially for consumers under 21. The Credit Card Accountability Responsibility and Disclosure Act, also known as the CARD Act of 2009, has played a pivotal role in the emphasis on income.
The act states that credit card companies cannot issue a credit card to those under 21 unless they apply in writing and can prove they have enough income to make the minimum payments.
Though credit card issuers may allow you to use a cosigner who can prove they have sufficient income, few issuers allow cosigners. Since the passing of the CARD Act, income has become a crucial factor in approval decisions for many student credit cards.
Income Requirements for Student Credit Cards
While credit card companies require sufficient income to qualify for a student credit card, there is no universal threshold that you must have to qualify. Every credit card issuer has different criteria, and the income requirements may vary.
On a credit card application, you can often include various income sources, such as income from a part-time job or scholarship funds, as part of your total income. Unfortunately, because of the CARD Act, you cannot include a parent’s income.
One of the biggest misconceptions about income requirements is that you must have a high income to start building credit. “Even a very modest income can be sufficient,” says Kyle DePaolo, co-founder of DePaolo & May Strategic Wealth, in Irvine, California. “Access to credit is arguably more about responsible use than income level.”
Generally, you must prove you can make your minimum payments without help from a cosigner. However, your exact income depends on the credit card issuer.
[Read: Best Credit Cards.]
What Counts as Income for Students?
Many types of income may count when students apply for a credit card. Nevertheless, not all income sources are permitted. Income sources that may qualify include:
— Part-time or full-time wages
— Freelance work or side-hustle income
— Money from scholarships and grants
— Allowance from parents
Credit card companies typically allow you to claim income from a job or side gig, as this is income you can use to repay your debt. Similarly, you can claim money you receive from scholarships or other financial aid (not student loans) after paying your tuition and school expenses.
Whether you can claim an allowance you may receive from family members depends on the issuer. Before applying, check the issuer’s requirements to know what income sources you can use.
Tips for Students Applying for Their First Credit Card
Applying for your first credit card can seem intimidating, particularly if you have limited income. However, following the right approach can increase your approval odds and help you build credit.
Here are some tips that can help you:
— Be honest about your income. The income you mention on your credit application should be as accurate as possible. Listing an incorrect income can not only cause delays in your application, but could also be considered fraud.
— Apply for a card with a low credit limit. You may also want to apply for a credit card with a low limit first. It can be easier to qualify for these cards, as they may have lower income requirements. You can use them while building credit and learning responsible borrowing habits.
— Keep your utilization low. Your credit utilization ratio is the amount of credit card debt you have divided by your total credit limit. For example, if you have one credit card with a $1,000 limit and a $250 balance, your utilization is 25%. Keeping your utilization below 30% can help boost your credit score.
These steps can help start you toward building a healthy credit profile. Once you have established a strong credit history, you can apply for higher-limit cards with more perks.
[READ: Best Credit Cards for Beginners]
Best Student Credit Cards to Consider
Several student credit cards exist, but we’ve selected some of the best options. These cards offer decent rewards and no annual fee.
| Credit Card | Rewards | Intro APR | Regular APR | Annual Fee |
| Discover it® Student Cash Back |
— 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. — 1% cash back on all other purchases |
0% on purchases for 6 months from date of account opening, then a 17.24% to 26.24% variable APR | 17.24% to 26.24% variable APR | $0 |
| Discover it® Student Chrome |
— 2% cash back at gas stations and restaurants (up to quarterly max, then 1%) — 1% cash back on all other purchases |
0% on purchases for 6 months from date of account opening, then a 17.24% to 26.24% variable APR | 17.24% to 26.24% variable APR | $0 |
| Capital One Savor Student Cash Rewards Credit Card |
— Unlimited 3% cash back on dining, entertainment, popular streaming services and grocery stores (excluding superstores like Walmart® and Target®) — 8% cash back back on entertainment purchases when you book through the Capital One Entertainment portal — Unlimited 5% cash back on hotels and rental cars booked through Capital One Travel (terms apply) — Unlimited 1% cash back on all other purchases |
None | 19.24% to 29.24% (variable) | $0 See Rates & Fees |
| Capital One Quicksilver Student Cash Rewards Credit Card |
— 5% cash back on hotels and rental cars booked through Capital One Travel (terms apply) — 1.5% cash back on all purchases |
None | 19.24% to 29.24% (variable) | $0 (See Rates & Fees) |
| Bank of America® Travel Rewards Credit Card for Students |
— Unlimited 1.5 points per dollar spent on all purchases |
0% on purchases and balance transfers for 15 billing cycles, then 18.24% to 28.24% variable APR | 18.24% to 28.24% variable APR | $0 |
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What Annual Income Is Required for a Student Credit Card? originally appeared on usnews.com
