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A student’s guide to credit cards, credit lines, and credit scores

The process of getting a credit card can be overwhelming—I know. I was lost. I didn’t know how, or even if, to apply for one. I was confused by the terms, like APR and billing cycle. The whole idea of a credit score made me anxious. Frankly, I was worried that I was committing tax fraud the entire time I was applying. Alas, I eventually ended up with a shiny pink Discover card in my wallet. In this column, I’ll cover the basics of credit cards and lay out the steps of getting one as a college student. 

To begin, we must first understand how a credit card works. Essentially, when you buy something with a credit card, you’re borrowing money from the credit card company. Each month you have a certain amount of money that you’re allowed to borrow, called your line of credit. At the end of the billing cycle, you will receive a statement totalling your transactions throughout the month, or your balance. A few weeks after that comes the due date, at which point you must pay your statement balance. Instead of paying the full amount, you can transfer part of the balance to the next month’s statement. We’ll go deeper into the dangers of this later, but this amount accrues interest and becomes credit card debt.

So, why get a credit card? Why go through the extra steps? For one, most credit cards offer benefits. For example, making purchases with a Delta Skymiles card will earn miles that can be applied to your next flight. Using a Capital One card for purchases accrues points, which can be redeemed for various rewards. Many cards also offer “cashback,” where you earn a percentage back of your purchases.

The primary purpose of a credit card, however, comes down to the idea of credit score. Being a “good” credit card owner, such as paying your bills on time and not getting too close to your credit limit, will build your credit score. A higher credit score will allow you to qualify for the lowest interest rates on loans, get better credit cards, and may help you save money on insurance. A bad credit score, however, will follow you for life. 

After learning this, I felt a little in over my head. Why would I get a credit card as a college student? It seemed like unnecessary stress. However, there are certainly advantages to being early to the game. To obtain a credit card, one must apply. If your credit score is too low, your income isn’t high enough, or your credit history is lacking, you will get denied. However, many companies offer student credit cards made specifically for college students. Many require a very low credit score or none at all. The income requirement is also low, making student credit cards easy acceptances.

Many student credit cards also have rewards tailored for college students. For example, with my Discover It Student card, I earn five percent cashback on Paypal and restaurant purchases. Next quarter, I’ll earn the same for any Apple Pay or Amazon purchases. Although student cards generally have generally low lines of credit, they’re a great way to begin building your credit score.

By the time you graduate and begin to make a real income, you already have a credit history and a credit score, which allows you to get better credit cards. Plus, some student cards allow you to upgrade to normal credit cards once you graduate. Overall, it’s never too early to start building your credit, and a student card is the best way to begin. 

Alas, I cannot make an argument for getting a credit card without emphasizing the responsibility that comes with it. As we know, the statement balance not paid will carry over to the next month. However, it will collect interest. This will accumulate very quickly. Whether it’s unexpected medical bills, emergency expenses, or just irresponsible spending, many credit card owners get trapped in a hole of credit card debt. This is best illustrated by the Rule of 72. 

In finance, the Rule of 72 is commonly used to estimate the doubling time of an investment. Seventy-two is divided by the annual rate of return to calculate the years until the principal will double. However, we can also use it to find the doubling time of credit card debt. Let’s assume a person has $5,000 of credit card debt and a credit card with an interest rate of 20%. Seventy-two divided by 20 gives us 3.6. So, without adding to or paying off any of the debt, it will increase from $5,000 to $10,000 in just 3.6 years. Just a quick calculation using the Rule of 72 can illustrate how easily one can become trapped by credit card debt.

Although it requires a great deal of responsibility, a student credit card is not as scary as it seems. They’re relatively simple to obtain and ultimately a great financial decision. Check if you’re pre-approved for a student card at Discover, Capital One, or Bank of America! 


~ Madison Keezer `26

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