One of the first steps on the road to adulting is getting a credit card and establishing a credit history. But don’t you already need good credit to qualify for a credit card? While it feels like a Catch-22, it’s possible to get a credit card without any credit history.
Designed for college students, student cards may come with benefits and rewards. On the other hand, secured cards are for anyone starting (or restarting) a credit journey—particularly those who can’t qualify for a more traditional credit card—and don’t tend to offer bonuses for new cardholders, cash-back rewards, or other student-friendly perks.
But what are the differences, and how can you decide which card to apply for?
What Is a Student Credit Card?
A student card is designed for college students who are building credit history while in school and still learning how to manage credit. A strong credit history will come in handy when you graduate and need to apply for your first apartment or car loan. To qualify for a student card, you may need to prove you have income, you’re enrolled in a two- or four-year school, are 18 or older (in most states), and have a Social Security number.
A card tailored for the college-kid market might be the best fit. After all, student-oriented benefits and bonuses can be helpful—such as statement credits for grade-point averages of 3.0 and up, or a one-year Amazon Student subscription. One common perk is very similar to traditional credit cards—a bonus offered to new cardholders when you spend a certain amount.
Most student credit cards offer rewards and benefits of some sort. Cash back on purchases ranges from 1%-5%, although there may be strings attached: limits on which purchases qualify for cash back, caps on earning, or for time limits on how long you can earn rewards.
If you travel or study internationally, there’s at least one card offering rewards you can redeem for travel, and several that don’t charge fees when you use your card abroad.
Some even provide perks such as secondary insurance for auto rentals, cellphone protection, and roadside dispatch.
Many student cards encourage credit-building through rewards for paying on time or otherwise keeping your account in good shape (discounts on streaming services, an extra 0.25% cash back, or a lump-sum cash reward). And if you miss or are late on a payment for the first time, the late fee might be lower than normal or waived by some cards.
Now, the fine print. Usually, student cards start you out with a minimum credit line of $300-$500, which is lower than many other card types. After several months, issuers may review your card use and offer to increase your limit.
Student credit cards may accept those with little credit history; for example, someone with “fair” credit could qualify. And, mindful of college budgets, most student credit cards are free of annual fees.
According to The Balance’s research, student cards come with lower-than-average interest rates compared to most consumer credit cards. Some student credit cards even offer an introductory 0% annual percentage rate—purchases won’t accumulate interest for six to 12 months.
After you graduate from college, your card issuer may reclassify your card as a more traditional card; be sure to read the fine print for any possible changes (such as interest rate).
What Is a Secured Credit Card?
Secured credit cards are far more bare-bones than student cards. Generally, secured cards are designed for two audiences: those without credit, and those trying to rebuild bad credit history.
With a secured credit card, you put a cash security deposit into an account held by the credit card company. The money isn’t used to repay your card balance, but instead stays intact in the account. Many secured cards lack the benefits you normally get from student cards.
Your security deposit serves as your credit limit. So if you deposit $500, your credit limit will be $500, which means you spend up to $500 on your credit card but no more than that. The limits can vary with your deposit, as long as you have the cash to spare and meet any issuer-specific qualifications such as income requirements. The deposit-and-spend range is $250 to $5,000, based on what most secured cards offer.
Your security deposit is fully refundable. The bank may refund your deposit or offer it as a statement credit when you make on-time payments then move into a traditional account.
Secured cards typically come loaded with interest rates higher than those found with business, student, cash-back, and travel rewards cards. Most secured cards don’t offer cash-back rewards, either, and many charge an annual fee.
Secured credit cards from credit unions may offer lower interest rates, and the card could come with benefits such as travel accident insurance, auto-rental collision insurance, travel and emergency assistance, and cellphone coverage. The secured deposit may earn interest, too.
Student Credit Cards vs. Secured Credit Cards
Here’s a comparison chart of the features we’ve discussed:
|Student Card||Secured Card|
|Minimum Credit Score||Fair or good||Poor|
|Cash Back or Rewards?||Usually available||Usually not available|
|Bonus||Usually available||Rarely available|
|Introductory 0% APR||Usually available||Usually not available|
|Average Interest Rate||Average around 18.83%||Average around 20.29%|
|Credit line||The minimum is set by the card company, usually around $300-$500.||The minimum is based on your deposit, can be $250-$5000.|
|Annual Fees||$0/year||Between $0-$36 and up, per year|
|Extra Perks||May be available||Usually not available|
The Bottom Line
A student card typically offers more college-centric perks, cash-back rewards, and benefits compared to a secured card. You’ll also benefit from a lower interest rate, no annual fees, and some cards will permit a co-signer if your credit isn’t yet good enough to acquire a card.
However, if you have a good relationship with your current bank and some spare cash from summer jobs, a short-term secured credit card could be a good fit, too. As well, if you need access to a higher credit line immediately, a secured card may give you more control over that aspect—although you could potentially pay higher interest rates, too.
There are other ways to build credit other than secured or student cards:
- Secured loan: Allows you to demonstrate on-time regular payments. These loans are often available at credit unions and banks, possibly with a lower interest rate than you’d find with an unsecured or student credit card.
- Be an authorized user: A parent can also add you to their credit card as an authorized credit card user. Your credit score benefits if your parent’s account has a history of on-time payments. However, only the primary cardholder typically has full access to the account and payment history.
- Monitoring your credit: Sign up for a free credit-monitoring service and check your credit report to identify errors that might damage your score.
- Make on-time payments: Paying on time is the single most influential factor used to formulate your credit score.