Maximizing Benefits with a Citizens Bank Student Credit Card

For college students, managing finances responsibly is a crucial skill that extends beyond the classroom. A key aspect of this involves understanding and utilizing credit wisely. Citizens Bank offers student credit cards designed to help students build credit while in school. This article explores the benefits of Citizens Bank student credit cards and how they can be a valuable tool for establishing a strong financial foundation.

Credit Cards: A Financial Tool

Credit cards and debit cards are both payment cards that offer convenience and security, but they function differently. A credit card allows you to borrow money from a financial institution up to a predetermined credit limit, which you must repay later with interest if you carry a balance. In contrast, a debit card is linked to your checking account, and purchases made with a debit card deduct funds directly from your bank account. While credit cards offer the ability to borrow money and build credit history, debit cards facilitate transactions using funds you already have. Understanding these differences can help you choose the right card for your financial needs and goals.

Types of Credit Cards Available

There is no “one-size-fits-all” solution when getting the right credit card. Each type is tailored for people with unique lifestyles and financial situations. These two factors help determine the best credit card for you.

Rewards Credit Cards: These cards offer rewards such as cashback, travel points, or miles for every purchase you make. They’re ideal for those who want to earn benefits while spending.
Travel Credit Cards: Designed for frequent travelers, these cards offer perks like airline miles, hotel discounts, and travel insurance. They often come with annual fees but can substantially reward those who travel frequently.
Cashback Credit Cards: With these cards, you earn a percentage of cashback on your purchases. They’re straightforward and beneficial for those who prefer simplicity in their rewards.
Balance Transfer Credit Cards: These cards allow you to transfer high-interest debt from one card to another with a lower interest rate, helping you save money on interest payments.
Secured Credit Cards: Geared towards individuals with limited or poor credit history, secured cards require a security deposit, which becomes your credit limit. They’re an excellent way to build or rebuild credit.
Student Credit Cards: Specifically designed for college students, these cards often have lower credit limits and fewer rewards but can help students establish credit responsibly.
Business Credit Cards: Tailored for business owners, these cards offer perks like expense tracking, employee cards, and rewards on business-related purchases to improve your bottom line. They help separate personal and business expenses while providing business-specific benefits.
Charge Cards: Require you to pay off your balance in full each month, making them ideal for those who want to avoid accruing debt but still enjoy the benefits of a credit card.
Change Cards: Similar to credit cards, typically round up your purchases to the nearest dollar and deposit the spare change into a savings or investment account, helping users save money effortlessly.

Outside of the business credit card, all of the above credit cards are considered different variations of personal credit cards. Each type has different cards, including multiple for-business credit cards tailored for non-profits, corporations, and small businesses. Understanding the different types of credit cards allows you to choose the one that aligns best with your financial goals and lifestyle. Consider your spending habits, credit history, and desired perks when selecting a credit card that suits your needs.

Understanding Student Credit Cards

Student credit cards are specifically designed for college students, helping them establish a credit history and build their credit score. They may be easier to qualify for than traditional cards. Often, student credit cards don't have the credit or income requirements that other types of cards do.

Read also: Is Citizens Bank Right for You?

Benefits of Citizens Bank Student Credit Cards

Citizens Bank student credit cards offer several advantages tailored to the needs of college students:

Building Credit History

Establishing Credit: A credit card or being an authorized user on a parent's account is a rite of passage into the world of financial responsibility for someone in college. Being an authorized user allows you to use your parent's credit card and begin establishing good habits. If you don't use credit cards wisely or form good credit habits early, there are implications to your credit history.
Reporting to Credit Bureaus: Citizens reports information about your Account to credit bureaus. Payments made by your billing statement due date can help build or establish your credit. Negative credit information, including late payments, missed payments, or other defaults on your Account may be reflected in your credit report and may adversely impact your ability to build credit.

Features and Rewards

Varied Features: Features of student credit cards can vary, but many offer cash-back or other types of rewards.
No Foreign Transaction Fees: If you plan on studying abroad, choosing a card without foreign transaction fees can help you save money.

Accessibility and Eligibility

Easier Approval: They may be easier to qualify for than traditional cards. Often, student credit cards don't have the credit or income requirements that other types of cards do.
Credit-Building Tools: If you have trouble qualifying for traditional credit cards, consider secured or credit-builder loans to establish or rebuild credit.

Financial Flexibility

Flexibility in Transactions: Credit cards add flexibility to your everyday transactions, not to mention added perks. Are you spending more on grocery and food delivery and less on gas? Maybe you're planning less travel and more staycations for the time being.

Responsible Credit Card Use

The ability to pay as a college student is essential. You can open a credit card in your own name and you have the full responsibility to spend and pay for the card yourself. Start using your credit card to establish good credit. A credit card is a tool in managing your money and building a budget. Make small purchases using your credit card that you have the money to pay for. Then pay off the balance when your statement arrives.

Establishing Good Credit Habits

Building a strong credit history is important, especially when it comes to applying for loans such as student loans, car loans and mortgages. Find more student budgeting resources to help you manage your money and helpful student banking information.

Avoiding Common Pitfalls

Late Payments: Negative credit information, including late payments, missed payments, or other defaults on your Account may be reflected in your credit report and may adversely impact your ability to build credit.
Maxing Out the Card: If you’re considering opening a credit card, be sure not to max it out.
Applying for Too Many Cards: Also, avoid applying for too many lines of credit in a short amount of time.
Misusing the Card: If you are an authorized user, keep in mind misusing the credit card can negatively impact the primary cardholder.

Credit Scores and How They Work

Credit scores are numerical representations of an individual’s creditworthiness, typically ranging from 300 to 850. They are calculated based on various factors such as payment history, credit utilization, length of credit history, types of credit used, and new credit inquiries. Lenders use credit scores to assess the risk of lending money to a particular individual. Here’s a general breakdown of credit score ranges:

Excellent: 750 & Above
Good: 700 - 749
Fair: 650 - 699
Poor: 600 - 649
Bad: Below 600

A higher credit score indicates lower credit risk and can lead to better loan terms, while a lower credit score may result in higher interest rates or even loan rejection. Specific key takeaways from your credit account may vary depending on the credit card issuer. Regularly monitoring and managing your credit can help improve your credit score.

Factors Influencing Credit Score

Several factors influence your credit score, including:

Payment History: Your payment history significantly impacts your credit score, so make sure to pay all your bills by their due dates.
Credit Utilization: Aim to lower your credit card balances and overall debt. High credit utilization ratios can negatively affect your score.
Length of Credit History: Closing old accounts can shorten your credit history and potentially lower your score. Keep your old accounts open and active, even if you’re not using them regularly.
Credit Mix: Having a mix of different types of credit, such as credit cards, loans, and a mortgage, can positively impact your score. However, only apply for new credit when necessary.
New Credit Applications: Each time you apply for new credit, it can result in a hard inquiry on your credit report, which may temporarily lower your score. Be selective about applying for new credit.

Improving Your Credit Score

Improving your credit score takes time and effort, but a good credit score is achievable with consistent financial habits. Here are some steps you can take to affect your credit score positively:

Pay Your Bills on Time: Your payment history significantly impacts your credit score, so make sure to pay all your bills by their due dates.
Reduce Your Credit Card Debt: Aim to lower your credit card balances and overall debt. High credit utilization ratios can negatively affect your score.
Don’t Close Old Accounts: Closing old accounts can shorten your credit history and potentially lower your score. Keep your old accounts open and active, even if you’re not using them regularly.
Monitor Your Credit Report: Regularly check your credit report for errors or inaccuracies that could drag down your score. Dispute any errors you find with the credit bureaus.
Diversify Your Credit Mix: Having a mix of different types of credit, such as credit cards, loans, and a mortgage, can positively impact your score. However, only apply for new credit when necessary.
Limit New Credit Applications: Each time you apply for new credit, it can result in a hard inquiry on your credit report, which may temporarily lower your score. Be selective about applying for new credit.
Consider Credit-Building Tools: If you have trouble qualifying for traditional credit cards, consider secured or credit-builder loans to establish or rebuild credit.

You can gradually improve your credit score over time by following these steps and maintaining responsible financial habits.

Types of Credit Cards and Their Benefits

Credit cards come with different rates, fees, features and benefits, so be sure to do your research when choosing the right card for your needs as a college student. Be a smart consumer. Here's a look at some common types of credit cards and their advantages:

Cash Back Cards

Some cash back cards offer a fixed percentage back on all purchases and don't have an annual fee. Other cash back cards may offer variable percentages back on everyday spending or for certain expense categories like restaurants, entertainment or online shopping. Cash back rewards programs add a gamification element to spending that can be used strategically to save on future expenses. Often, your cash back balance can be deposited into your bank account or applied as a payment on your credit card statement. Some cards even allow you to buy partner gift cards with your cash back reward. The top advantages are that you can put this "free" money into a savings account, use it to pay extra on any debts or put it toward the cost of another purchase. This might be the right type of credit card for you if you already make purchases that align with the reward categories.

Travel Rewards Cards

With a travel rewards credit card, you earn points on all your purchases that translate into credit you can use to pay for travel-related expenses like airline and train tickets, hotel stays and rideshares. This type of credit card also offers a gamification aspect. Travel rewards card holders might pay for most or all their everyday purchases and bills with their credit card and end up accruing enough rewards for discounted or even free flights and hotel stays or other travel-related expenses and upgrades. If you're a frequent traveler for work or just because you enjoy it, this kind of rewards credit card might be ideal for you to gain significant savings.

Cards with Annual Fees

Many basic credit cards are available without any fee for using them - other than interest charges and specific use fees, such as for late payments or cash advances. But some cards charge an annual fee in exchange for significant perks that make it worth the cost. The main advantage of these cards is clear - for a comparatively small fee, you have the potential to gain much more in perks and savings than you're paying for the card. But before signing up for an annual fee credit card, it's a good idea to review exactly what it offers and then review your existing credit card statements and spending to evaluate whether the card's benefits naturally line up with what you use your card for.

Store Credit Cards

Retailers with a large base of customers sometimes offer their own store credit card that may or may not be affiliated with a major credit card issuer. In most cases, store credit cards will offer loyalty-based perks. You may get regular discounts, special limited-time deals, early access to sales or points you can apply toward future purchases at the store. Similar to cash back and travel reward cards, store credit cards are a great tool for shoppers who are loyal to a particular store and benefit from the discounts and advantages they bring.

Low-Interest Credit Cards

Many major credit card companies and banking institutions offer low-interest credit cards that are designed both to attract new customers and give people who may struggle with money management a way to establish better credit habits. Low-interest credit cards are something everyone wants forever, which is exactly what makes them attractive for either starting with or switching to if you have high interest rates and high balances with other credit card companies. The introductory interest rate can give you a great opportunity to buy what you need and pay down the balance without the fear of looming interest. If you tend to carry balances forward every month, a low-interest credit card can be a smart way to start fresh or transfer your debt so you have a stretch of time to get yourself on track.

0% APR and Balance Transfer Cards

A 0% credit card is typically a card that allows you to transfer the balance from another credit card and pay no interest on the transferred amount for an introductory period. The big benefit of a 0% card is the eliminated or reduced annual percentage rate (APR). If you open a card with an introductory interest rate of zero and transfer a balance from a card with a much higher rate, you can save a considerable amount of money. A 0% credit card can be the way to go if you carry a large balance on a card with a higher interest rate and are interested in reducing your debt more quickly. Balance transfer cards allow you to move the balances on your existing credit cards to a new account. The main perk of balance transfer credit cards is that you're essentially moving or consolidating what you owe to a clean slate. If you're motivated to gain control of your existing credit card debt, a balance transfer credit card could be your solution. It can give you a runway to decrease or even eliminate your principal balance.

Secured Credit Cards

Secured credit cards can help you build credit history. One of the main advantages of a secured credit card is that you don't need excellent credit to qualify. Since you put down a security deposit to open the card, it's less risky for the card company, so you can get the card even with a poor credit score. Secured credit cards can be helpful if you want to improve your credit score or can't get approved for a different card. But you'll want to be sure you understand the terms before you sign up.

Applying for a Citizens Bank Student Credit Card

Applying for a credit card is a rather easy process.

Eligibility and Requirements

The requirements depend on the card itself, with a secured credit card having less stringent requirements usually than a major rewards credit card, for example. The requirements typically include being at least 18 years old, having a steady source of income, and having a good credit history. When evaluating your credit card application, lenders also consider factors such as your credit score, debt-to-income ratio, and employment status. Some credit cards may also have specific eligibility criteria based on factors like income level, residency status, or credit history.

Steps to Apply

Check Your Credit Reports: You can get your credit reports free through each of the three major credit bureaus - Experian, Equifax, and Transunion.
Limit Applications: Applying for a credit card is not like applying for a scholarship - with a credit card, you want to limit how many applications you send out. That means you should limit your applications to one or two credit cards.
Consider Your Bank: A good place to start is by getting a credit card through your primary bank.

Application Process

Credit card applications are fairly straightforward. The time it takes to get a decision on your application can vary. Some card issuers provide instant approval or rejection, while others can take weeks before making a decision. When you get your card, don't rush to the mall to test it out!

Alternatives to Credit Cards

When a college student borrower has insufficient or no credit history, a creditworthy individual may be necessary to apply for a credit card. Applying for a credit card with a cosigner allows you to have a credit card in your own name; however, the cosigner (typically a parent or legal guardian) will be responsible for making payments on the card if you cannot pay your bills. In this situation, the cosigner's credit history could be affected. In addition to student credit cards, there are alternative ways to build credit:

Authorized User

One way is to be added as an authorized user to another account. This is a great way to start building your independent credit history.

Student Loans

One way to boost up that credit score is to consider beginning to make payments on student loans while in college. There are two main types of student loans: private (such as from a bank) or federal (from the government). Most federal student loans are deferred, which means you don’t need to make payments until six months after you graduate or drop below half-time enrollment. With a private student loan, you’ll typically have a choice of several repayment options. The type of repayment option you choose should be based on your ability to repay the loan.

Deferred Repayment: This option means making no payments while enrolled in school and beginning payments within a set time frame after you graduate, leave school, or drop below half-time enrollment. Keep in mind that with private student loans, interest starts accruing as soon as the loan is disbursed (when your school receives funds). Additionally, interest-only repayment could get you a lower interest rate compared to the same student loan with deferred repayment. Both immediate and interest-only repayment options could also result in lower monthly payments after you graduate. While there are no eligibility criteria for borrowers when choosing a repayment option, there are eligibility criteria for being approved for a loan. Keep in mind a family’s selection is personal and should be based on the ability to repay.
Promissory Note: It's important to closely read and understand the language in your loan's promissory note, since it governs terms and conditions of private student loan repayment. Be sure to discuss repayment with the cosigner so each party understands how repayment will work and who will be responsible for what amount of the loan.

Other Types of Loans

Also, paying other types of loans can also create an opportunity to build credit. For example, let’s say a student can’t get to all their classes on foot and has decided to buy a car. Taking out an auto loan to finance a car and paying the bill on time can help build a student’s credit score.

Monitoring Your Credit

While there’s a lot to keep track of in college, it can help if students monitor their credit report. Keep in mind, it may take three to six months of credit activity before a credit score is created. Monitoring credit is also a safety mechanism against identity theft, though not foolproof. Although a credit report is full of useful information, it doesn’t give an actual score.

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