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Back to School Credit Card Offers: What Students Need to Know

It's back to school for college students — and that means it's back to work for the credit card companies targeting college students with offers. Many students may wonder if they should take advantage of one of these offers, especially at the start of the new school year.

Obtaining a credit card can be a useful financial learning opportunity. Having one can teach you how to budget and pay bills on time. It also makes it easier to make online purchases and track spending. And credit cards are safer to carry around than cash. (If you lose a credit card or have your wallet stolen, all you need to do is call the bank that issued your card and they'll immediately stop it from being used.)

Another big perk: Credit cards can help young adults build their credit history and strong credit score they will need later on when they want to rent an apartment, get a loan for a car, or buy a house.

Here's what college students need to know about how credit cards work — and how to manage one responsibly.

Minimum payments. This is the minimum amount of money you need to send to the credit card company every month to avoid being marked late or in default on your payment. You might feel like you're doing well if you can easily afford to make your minimum payment each month, but be careful — this number is usually significantly lower than your total balance1 (what you ultimately owe).

For example, say you have a balance of $2,000 on a card with a 20% Annual Percentage Rate (APR) and the card issuer calculates the minimum payment as 3% of your balance each month. In that case, your initial minimum payment would be just $60. However, paying just the minimum each month would take you over nine years and cost you more than $1,800 in interest. And that's assuming you don't use the card for any new purchases during that timeframe.

Interest rates. This is how much you pay, each year, on the amount of money you don't pay off at the end of the billing cycle. Student credit cards, which are designed specifically to help college students build credit, may come with higher rates than other credit cards.2 According to Business Insider, APRs on student cards typically run anywhere from 17.99% to 29.74%,3 so interest can really add up if you don't pay your bill in full each month.

Even worse, if you do carry a balance, your credit card issuer might charge interest on all new purchases starting the moment you make them.4

Credit card icon
Some rewards cards charge annual fees, but most students don't use their cards enough to earn rewards that would make paying an annual fee worth it.

Due date. This is the date by which you must make at least the minimum monthly payment; otherwise, you will be charged a late fee in addition to accumulating interest.

According to the Consumer Financial Protection Bureau, most credit card issuers charge a late fee of $25, although it can be higher.5

If you pay your bill 30 days or more,6 the credit card company can report your late payment to the main credit bureaus. Missing just one payment deadline can negatively impact your credit score.

While the impact of a late payment depends on how late your payment is and your overall credit profile, according to a FICO analysis, one 30-day late payment can lower your score by more than 80 points7 if you have a high credit score.

Annual fees. Some credit cards charge you an annual fee but not all do. Some annual fee cards will try to lure you in by offering greater rewards. However, these greater rewards are typically not worth the annual fee unless you are charging a lot on the card every month.

Rewards. These are perks (like cash back or free travel) that tempt you into spending more money. But the perks can also be helpful too — especially if there is cash back that you can apply to your monthly bill.


Tips for Managing a Credit Card Responsibly

To be sure, there are potential pitfalls to getting a credit card. But if you use one wisely, they can make certain tasks easier — and help you build your credit for the future. A few simple tips can help you maximize the plusses of getting a credit card while minimizing the downsides.

  • Choose a credit card with no annual fee. That applies even if a card with an annual fee offers better rewards. Most college students don't have the volume of charges to make that annual fee worthwhile.

  • Only charge as much as you can afford to spend each month. Pay your bill in full and don't incur interest charges.

  • Set up automatic payment for your bill online so you don't accidentally miss the deadline. This also avoids the problem of your bill (or check) getting lost in the mail.

  • Scan your bill every month to make sure there are no fraudulent charges. If you see any charges you didn't authorize, contact the credit card company immediately.

  • Review your credit report at least once a year. You can order a free copy of your credit report from each of the three credit bureaus once a year at AnnualCreditReport.com.8 Make sure that there aren't any accounts that don't belong to you on your credit report, your outstanding balances are accurate and your credit card issuers haven't reported any on-time payments as being late.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Evelyn Waugh, "How Is a Credit Card Minimum Payment Calculated?" Experian, published May 28, 2023, accessed June 1, 2023.

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  2. Ben Luthi, "How to Get a Student Credit Card," Experian, published March 8, 2023, accessed June 1, 2023.

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  3. Kiz Knueven and Joseph Hostetler, "The average credit card interest rate by credit score and card," Business Insider, updated May 11, 2023, accessed June 1, 2023.

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  4. Mass.gov, "Does a Credit Card Make Sense for Me?" accessed June 1, 2023.

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  5. Consumer Financial Protection Bureau, "Credit Card Late Fees," published March 29, 2023, accessed June 1, 2023.

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  6. Louis DeNicola, "When Do Late Payments Get Reported?" Experian, published December 4, 2019, accessed June 1, 2023.

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  7. myFICO, "How Credit Actions Impact FICO Scores," accessed June 1, 2023.

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  8. AnnualCreditReport.com, "3 Steps to Your Free Online Credit Reports," accessed June 1, 2023.

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