A college student debunks these 5 credit card myths
Editor’s note: This is a recurring post, regularly updated with new information.
In the movies, college kids are always seen applying for their first credit card on a whim after not being able to cover an expense, such as spring break (this is how The Points Guy, Brian Kelly, got started). Not surprisingly, they end up in debt and have to come up with a way to fix the mess.
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However, that’s one of the common misconceptions young people have unfortunately learned: credit cards don’t have to become a financial burden. There are plenty of positive attributes and perks that you miss out on when you avoid credit cards and only stick to cash and your debit card. Below I outline other student credit card myths.
Credit cards only lead to debt
I got my first credit card, the Discover it Cash Back, during my sophomore year in college. Although my spending habits have always been a little more on the wild side, I never ran into debt because I followed the age-old rule: don’t spend what you don’t have. The information for the Discover it card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: Ten commandments for rewards credit cards
Responsible credit card use will keep you out of debt and from negatively impacting your credit score. A lot of people see credit cards and think free money since the charges don’t have to be paid back right away. This is a sure way for you to acquire debt because what you don’t pay at the end of the month will have interest added on to it.
Credit cards also have a lot of benefits that you can access if you manage your spending right. Ultimately you can build credit that will help benefit you throughout life.
Young people can’t apply for credit cards
Most people don’t have any credit history in coming into their 20s, and it can be hard to know where to start when you may still be supported by your parents. There are plenty of student cards out there that are great for those who don’t have a credit history and may not have a steady income. Even those who have absolutely no credit at all can apply for secured credit cards when starting out.
Student cards often offer no annual fee and include incentives for paying your bills on time, such as extra cashback. The Discover It Student Cash Back card offers a $20 credit for having GPA of over 3.0.
Related: Best credit cards for college students
Getting credit cards will hurt your credit score
If you’re opening tons of credit lines and racking up debt on each one, yes -- credit cards will hurt your credit score. However, responsibly opening one card won’t do any damage. Your credit score is calculated by a few factors and opening a credit card is a small percentage.
Related: How does applying for a new credit card affect my credit score?
When you open a credit card, the company does something called a “hard inquiry” when they look into your credit. After applying for a credit card you can expect your score to drop by around five points, but don’t worry -- it’s not permanent.
Before you apply for a credit card you should probably first check your credit score, which won’t affect your score if you use the right tools. Checking your credit report is free from the three major credit reporting agencies once a year. During the coronavirus pandemic, all three are offering free credit reports once a week through April 2021. There are also plenty of apps that can help you track your credit score.
Credit cards should only be used for basic expenses
A credit card can offer many more perks than you may realize. From points and miles to savings on purchases on the various expenses, credit cards can actually save you a lot of money over time.
There are many cards that are great for everyday spending such as the Chase Freedom Unlimited card, which will reward you 5% cash back on travel purchased through Chase Ultimate Rewards, 3% on drugstore purchases and dining at restaurants, and 1.5% on everything else.
If you absolutely need to use a credit card to pay for an expense that you might not have the funds on hand for, make sure to do your research into which of your cards is best. Some cards have higher interest rates than others which can harm you in the long run.
You can’t earn points and miles as a student
Points and miles have never been at the forefront of my mind -- but they should have been. If I (along with my fellow students) had more information about how to utilize rewards programs, points and miles could have come in handy for all those spring break trips we’ve taken over the years. Points and miles can you free nights at hotels, airfare and much more.
Related reading: Funding your next college vacation with points and miles
Do your research and find a card that best fits your lifestyle. I frequently use Amtrak to get back and forth from school so the Amtrak Guest Rewards Mastercard could be a great way for me to gain points that will upgrade my travel experience.
As you build credit you may become eligible for more cards. Travel cards, hotel cards, airline cards and transferable points cards are some great ways to earn points and miles. The information for the Amtrak Guest Rewards World Mastercard has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related reading: From no credit to free flights: An inside look at a 23-year-old’s credit journey
Bottom line
Credit cards can be a great tool for college students looking to maximize rewards that can help to elevate their college experience. As a young person remember, credit cards are not your enemy. With proper usage and a class or two on financial literacy, you can build credit and become a (responsible) credit card master in no time.
If you’re ready to dive into the world of credit cards, points and miles make sure to check out TPG’s beginner guide.
Further reading for college students:
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| 6X | 6x Marriott Bonvoy Points on each dollar of eligible purchases at hotels participating in the Marriott Bonvoy® program. |
| 4X | 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping. |
| 2X | 2x points on all other eligible purchases. |
Intro Offer
Limited Time Offer: Earn 125,000 Bonus Marriott Bonvoy Points after you use your new Card to make $5,000 in purchases within the first 3 months of Card Membership. Offer ends 5/3/23.Earn 125,000 points75,000 pointsAnnual Fee
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Why We Chose It
The Marriott Bonvoy Business Amex is a stacked card with a rewards rate that will help you earn bonus points on everyday and business-related purchases. You'll earn 15 elite night credits each calendar year, and receive automatic Gold elite status. Finally, the free night award certificate with a redemption level of 35,000 points or less can get you hundreds of dollars in potential value each year.Pros
- 6 points per dollar on eligible purchases at hotels participating in the Marriott Bonvoy program
- 4 points per dollar at restaurants worldwide, U.S. gas stations, wireless telephone services purchased directly from U.S. service providers and U.S. shipping
- 2 points per dollar on all other eligible purchases
- Earn a free-night award each card renewal month (up to 35,000 points)
- Receive 15 elite night credits to jump-start status
- Transfer Marriott points to 40+ airlines
Cons
- Airline points transfer ratios are poor
- Must spend $60,000 in a year for second free-night award
- Limited Time Offer: Earn 125,000 Bonus Marriott Bonvoy Points after you use your new Card to make $5,000 in purchases within the first 3 months of Card Membership. Offer ends 5/3/23.
- Receive a 7% discount off standard rates for reservations of standard guest rooms at hotels that participate in the Marriott Bonvoy program when you book directly. Terms and Conditions Apply.
- 6x Marriott Bonvoy Points on each dollar of eligible purchases at hotels participating in the Marriott Bonvoy® program.
- 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
- 2x points on all other eligible purchases.
- Receive 1 Free Night Award every year after your Card renewal month. Plus, earn an additional Free Night Award after you spend $60K in purchases on your Card in a calendar year. Awards can be used for one night (redemption level at or under 35,000 Marriott Bonvoy® points) at hotels participating in Marriott Bonvoy®. Certain hotels have resort fees.
- Enjoy Complimentary Marriott Bonvoy Gold Elite Status with your Card.
- Terms apply.