Student Credit Cards: Safe Rules for Millennials

NEW YORK (MainStreet) — Millennials who are heading back to their college campuses might be obtaining their first credit card, which can help them build their credit score.

Owning a credit card comes with its caveats, risks and rewards, and college students should be aware of how it will affect their credit score in the future, said Julie Myhre, editor at NextAdvisor.com, a Burlingame, Calif. website which reviews consumer services such as credit cards and car insurance companies.

Millennials should check out credit cards designed specifically for college students, because they do not require the higher credit scores, she said. Since many students have little or no credit because of a lack of credit and payment history, getting the right card can help them establish a pattern of paying their bills on time.

Credit card issuers who offer student-specific cards usually require a minimum FICO score of 660 to 740 in order to get approved, said Myhre. FICO scores range from 300 to 850.

Finding the lowest interest rate will help students manage their debt, Myhre said. Most credit card companies will give consumers an estimate of the annual percentage rate or APR for their card before they are approved. Students should expect the APR to range from 11.99% to 23.99%, depending on their credit. Rates that are above 24% should be avoided.

"Since most college students don't have any credit, it is important to find the best card for your needs," she said.

Interest rates correlate with your credit score and will decrease as your credit score improves. For the best student credit cards, go here.

Students should find a card that does not have an annual fee even if they are receiving rewards such as cash back, she said.

"There is no reason that they should pay an additional annual fee even if they get rewards," Myhre said. "Avoiding that can save them $100 a year."