As a student, managing your finances can be challenging. You may be juggling tuition fees, textbooks, and other expenses while trying to build your credit history. One option to consider is getting a student credit card or becoming an authorized user on someone else’s credit card. But which one is the better choice for you? In this article, we’ll compare student credit cards and authorized user cards to help you make an informed decision.
What is a Student Credit Card?
A student credit card is a credit card specifically designed for students. These cards typically have lower credit limits and fewer rewards compared to regular credit cards. They are also easier to qualify for, making them a great option for students who are just starting to build their credit history.
TD Bank Student Credit Card
One example of a student credit card is the TD Bank Student Credit Card. This card offers a low credit limit of $500 and has no annual fee. It also offers a rewards program where you can earn points for every dollar spent, which can be redeemed for cash back, gift cards, or travel rewards.
Discover Student Credit Card
Another popular student credit card is the Discover Student Credit Card. This card also has no annual fee and offers a rewards program where you can earn cash back on every purchase. It also has a unique feature called Good Grades Rewards, where you can earn a $20 statement credit each school year for maintaining a GPA of 3.0 or higher.
What is an Authorized User?
An authorized user is someone who is added to someone else’s credit card account. This person is given a card with their name on it and can make purchases using the card. However, they are not responsible for making payments on the card. The primary cardholder is responsible for all charges made by the authorized user.
How Does Being an Authorized User Affect Your Credit?
As an authorized user, the primary cardholder’s credit history and credit limit will be reflected on your credit report. This can help you build your credit history, as long as the primary cardholder has a good credit history and makes timely payments.
Student Credit Card vs Authorized User: Pros and Cons
Now that we understand what student credit cards and authorized users are, let’s compare the pros and cons of each option.
Student Credit Card Pros
- Easier to qualify for: Student credit cards typically have lower credit requirements, making them easier to get approved for.
- Build credit history: Using a student credit card responsibly can help you build your credit history, which is important for future financial endeavors.
- Rewards: Some student credit cards offer rewards programs, allowing you to earn cash back or other rewards on your purchases.
Student Credit Card Cons
- Lower credit limit: Student credit cards usually have lower credit limits, which may not be enough to cover all your expenses.
- Fewer rewards: Compared to regular credit cards, student credit cards may have fewer rewards and benefits.
- Limited usage: Student credit cards may have restrictions on where they can be used, such as only on campus or at certain merchants.
Authorized User Pros
- No credit check: As an authorized user, you do not need to go through a credit check, making it easier to become an authorized user.
- Build credit history: Similar to a student credit card, being an authorized user can help you build your credit history.
- Access to higher credit limit: As an authorized user, you have access to the primary cardholder’s credit limit, which may be higher than what you would get with a student credit card.
Authorized User Cons
- No control over payments: As an authorized user, you are not responsible for making payments on the card. This means you have no control over whether or not payments are made on time.
- No rewards: Unlike student credit cards, authorized user cards do not typically offer rewards programs.
- Potential for credit damage: If the primary cardholder does not make timely payments or has a high credit utilization ratio, it can negatively impact your credit score as an authorized user.
Before jumping to the best option, you might think about the difference between a secured credit card and authorized User. This guideline helps you find out more about secured credit cards vs. authorized User.
Which Option is Right for You?
When deciding between a student credit card and becoming an authorized user, there are a few factors to consider.
Credit History
If you have little to no credit history, a student credit card may be the better option for you. As long as you use it responsibly, it can help you build your credit history and improve your credit score.
On the other hand, if you have a limited credit history or a low credit score, becoming an authorized user on someone else’s credit card can help you improve your credit score. Just make sure the primary cardholder has a good credit history and makes timely payments.
Expenses
If you have a lot of expenses, a student credit card may not be enough to cover them. In this case, becoming an authorized user on someone else’s credit card can give you access to a higher credit limit.
Rewards
If you are looking to earn rewards on your purchases, a student credit card may be the better option. However, if the primary cardholder has a credit card with a good rewards program, becoming an authorized user can also give you access to those rewards.
Conclusion
Both student credit cards and authorized user cards have their pros and cons. Ultimately, the right option for you will depend on your individual financial situation and goals. If you are a student looking to build your credit history, a student credit card may be the better option. However, if you have a limited credit history or need access to a higher credit limit, becoming an authorized user may be the way to go. Whichever option you choose, make sure to use it responsibly and make timely payments to improve your credit score and set yourself up for financial success in the future.
