Student vs. Secured Credit Cards: Which Should You Choose?


A credit card is usually the first entry on most young adults’ credit reports, but many find it challenging to get approved for that first card. You might be comparing a student vs. secured credit card because both tend to have an easier approval process.

Lenders are often hesitant to work with young adults because there’s less data to indicate how they’ll handle the responsibility. Fortunately, student and secured credit cards are two types of credit cards that you can qualify for even if you don’t have any credit history to your name. So, looking at a student vs. secured credit card, which is better?

When choosing between a student vs. secured credit card, here’s how to decide on the best option for your situation.

Student credit cards

One of the main differences between a student vs. secured credit card is that student credit cards are designed specifically to help college students establish a credit history. They work like regular credit cards, but they’re much easier to qualify for. You don’t need a certain credit score — or any credit history at all, for that matter.

However, you do need to be at least 18 and provide proof that you’re enrolled full-time or part-time in a qualifying university to get a student credit card. You’ll also have to show proof of income, even for a student card. A part-time job is fine in most cases. The card issuer just wants to be sure that you have a means to pay back what you owe.

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The best student credit cards offer rewards just like regular credit cards. And when it comes to a student vs. secured credit card, a student credit card is more likely to offer some rewards. But don’t expect to rake in hundreds of dollars in cash back or airline tickets. Student credit cards typically have lower credit limits — often $1,000 or less. So if your student card offers 1% cash back on all purchases, the most you’d earn in a month would be $10 in cash rewards. This is disappointing to some, but remember: You’re not getting a student credit card for the rewards. You’re getting it so you can establish yourself as a responsible payer and start building credit.

Some card issuers will automatically increase the credit limit on a student credit card after a few months of full, on-time payments. If they don’t do this automatically, you can ask an issuer for a credit limit increase. When you graduate, many student card issuers will upgrade you from a student credit card to a regular credit card, either automatically or at your request. Ideally, at that point, you’ll have established enough of a credit history that you can apply for other credit cards that interest you as well.

Secured credit cards

Secured credit cards aren’t designed just for students, but they can be a good way for young adults to build their credit if they don’t qualify for a student credit card. When it comes to a student vs. secured credit card, while they’re both easier to qualify for, a secured credit card is generally more likely to accept an applicant with poor credit.

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It’s called a secured card because it requires a security deposit. This amount is usually equal to your credit limit. It starts around $200, but you might be able to put down more if you want a higher credit limit on your secured card. If you fail to pay back what you owe, the card issuer will keep your security deposit. But as long as you keep up with the payments, the company will refund your deposit if you ever close your secured card.

The security deposit lessens the risk to card issuers, so you don’t need a good credit score to apply for one of these. In fact, you might get approved if your score is under 600. But these cards tend to carry a high interest rate, often higher than 20%, so they can hurt you if you carry a balance from month to month. That said, when comparing a student vs. secured credit card, they’re both likely to come with a high APR. You should avoid carrying a balance on either. One perk of the secured card, especially if you have trouble managing your spending, is the low credit limit — it’s impossible to fall into too much credit card debt.

Rewards among secured credit cards are rare, but the best secured credit cards do offer limited rewards and perks. like a low cash back rate or free credit score. As with student credit cards, however, the low credit limit on secured credit cards doesn’t allow for high rewards-earning potential. Once you’ve proven yourself to be a responsible payer, your card issuer may automatically consider you for an upgrade to a regular credit card, or you can request one yourself. Once this happens, your security deposit will be refunded.

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Which type of card should you choose?

When it comes to choosing between a student vs. secured credit card, student credit cards are often the better choice if you qualify. Many don’t charge an annual fee, and you don’t have to put a deposit down. But if you don’t qualify for a student credit card, either because you’re not enrolled in college or because you already have some bad marks on your credit report, a secured credit card is a good alternative. Look for one with no annual fee and a low security deposit.

As you make your choice between a student vs. secured credit card, it’s important to use your new card responsibly and avoid credit card debt. If you stay below your credit limit and make all your payments on time, a credit card can go a long way toward improving your credit score. But it could just as easily ruin your credit if you skip your monthly payment or regularly spend up to your credit limit.

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