Why Students Should Get Credit Cards (But Be Careful)
Many students in the US use credit cards not just as a spending tool, but as a first step in building credit history. If a college graduate in the US has an average credit score (FICO) below 680, it can be difficult to get a rental contract or a phone line when they first start working. Some scholarship applications in Canada indirectly take into account the student's financial literacy — responsible credit card use is a plus here.
In the UK, some banks offer special 0% interest “introductory” campaigns for student credit cards, but once these periods end, interest rates can skyrocket to 24%. When used correctly, credit cards can be the most reliable part of a student's digital wallet; when used incorrectly, they can turn into debt that lasts for years after graduation.
Unknown Details of the Application Process
In the US, students under the age of 21 must either show proof of regular income or provide a guarantor in order to obtain a credit card on their own (CARD Act 2009). Some US banks verify that students are actually enrolled by requesting their course schedule or school ID during the student credit card application process. In some university campuses, credit card companies are legally prohibited from setting up booths because they have previously used “gift-giving” tactics to lure students into debt traps.
In Canada, credit cards issued to students generally have limits between CAD 500 and CAD 1,000, but students who make regular payments can have their limit doubled within a year. In the UK, cards called “student credit builders” automatically offer interest rate reductions if the student makes regular payments for the first six months.
Impact on Credit Score and Unseen Long-Term Consequences
In the US, students who use their first credit card responsibly can get much better interest rates on large loans such as mortgages or car loans after graduation. The “age” criterion in the FICO score is based on how long the credit card has been open; keeping the first student card open for years plays a major role in improving the score. Some credit card companies in Canada evaluate credit scores based not only on payment habits but also on the percentage of the total available limit used.
In the UK, a student who consistently uses more than 30% of their credit card balance will see their credit score begin to decline; this is based on a metric called the “credit utilization ratio.” Many students are unaware that making only the minimum payment each month instead of paying off the card in full can result in higher interest charges and a lower credit score in the long run.
Real Dangers Seen on Campus
According to some campus studies in the US, 34% of students who have credit cards in their first year accumulate debt up to 90% of their limit within the first six months. While some student cards may seem appealing due to “reward points,” they often come with monthly minimum spending limits that encourage unnecessary spending. In some U.S. states, credit card debt collection can be directed to parents—even without their written consent.
In Canada, 12% of students aged 18–22 take out a “prepayment” from another credit card to pay off their credit card debt — entering this vicious cycle at an early age. In the UK, some students find themselves doubling their minimum debt within a few months because they don't notice the interest that comes after the 0% interest period ends.
Real User Experiences and Psychological Effects
Some American students spend $10–20 per month just to build their credit score, then pay off the balance in full — this method is known as “passive building.” A student who made no late payments for three years saw their credit score surpass 800 by age 21—above the U.S. average. Some users notice a significant drop in their scores when they cancel their first card, as it was the “oldest account” affecting their credit score.
A British student shared that by tracking every purchase using a shopping app, they reduced their credit card spending by 30% and avoided paying interest. A Canadian student said that printing out their credit card statement and hanging it on the wall to visualize their spending brought “not shame, but discipline.”
The Hidden Side of Cashback and Reward Systems
While some student cards offer up to 5% cashback promotions, these rates apply only to specific categories (e.g., cafes, gas) and for short periods. In the US, some credit cards only credit cashback rewards to the account once a $25 threshold is reached, making it difficult for students with small spending amounts to access the benefits. Psychological research shows that spending is 18% higher when there is a promise of “reward points” — especially among low-income students.
In the UK, some student cards offer a points system in the form of “discount coupons” instead of cash; however, these coupons often come with high spending requirements. Many reward cards do not offer bonuses unless a minimum of $500–1,000 is spent within the first three months — which can turn students into aggressive consumers.
Special Considerations for International Students
International students in the US typically cannot apply without a Social Security Number (SSN), so banks offer “secured” cards. Secured cards require a deposit, but some banks require 6–12 months of regular use before refunding the deposit. Some cards designed for international students in Canada apply hidden commission fees of up to 2.5% on foreign currency transactions.
In the UK, some banks may require international students to provide a “local guarantor” when applying for a credit card, which can be a barrier for many students. Some US cards appear to allow online applications for students abroad, but require a US address for card delivery — this detail often emerges after the application is submitted.
Digital Security and Fraud Scenarios
Most student cards are protected by simple passwords and PINs, which poses a risk in case of physical theft on campus. A study in the US found that 40% of students have been exposed to credit card fraud at least once. The most common places where card information is leaked include online clothing sites, fake scholarship application forms, and fake campus organizations.
Some scammers send fake “prize winning” emails to student dormitories requesting card information; this method has seen a significant increase in Canada over the past three years. Students who enter their card information on mobile apps via open Wi-Fi may have their cards frozen by banks due to suspicious activity detected when their devices log in from multiple locations.
Post-Graduation Card Transition and Risks
The “student” version of credit cards is only active for 4–5 years at most banks; after graduation, it is automatically converted to an adult card. During this transition, the interest rate increases, the card limit increases — but at the same time, the reward system may change, and if the student does not understand this difference, their debt can quickly increase. Some banks cancel student cards after graduation and suggest opening a new card; however, when the old card is closed, the age of the credit history is also reset.
In the US, some former students keep their first credit cards in their wallets just to “keep them open” because the age of these accounts contributes the most to their credit score. A common complaint is that previous period points are deleted after switching cards because the card type has changed—the user agreement does not clearly state this risk.
Alternatives and Financial Health Without Credit Cards
Some students prefer to develop spending habits with prepaid cards instead of credit cards—these cards do not affect credit scores but provide control. In Canada, some fintech companies have developed systems that can replace traditional credit cards with “spending tracking” apps tailored for students. In the UK, new-generation digital banks offer cards linked to student accounts with spending limits — allowing users to set their own risk levels in writing.
In the US, some universities have started organizing “peer-to-peer budgeting” workshops to prevent students from entering credit-based systems too early. For students who do not want to use credit cards, mobile payment solutions (Apple Pay Cash, Venmo Card) have become alternatives for small purchases and on-campus shopping.