Two smiling students sitting on a couch and holding a credit or debit card and a tablet.
Freshman Finances

Debit Cards v. Credit Cards: What’s Best for College Students?

College brings new opportunities, freedom, and decisions for students. An aspect to this new stage of life is handling your personal finances. For instance, choosing between a debit or credit card is a tricky financial decision for college students. So, which route is best? Let Varsity help you determine which card type is right for you with key insights about the pros and cons of debit and credit cards.

What is a debit card?

A debit card makes payments by pulling funds directly from the money you have in your checking account. This means you’re not loaning any money from the bank, just using your own. Additionally, you can use your debit card for online purchases.

College students may find a debit card useful as they become financially independent. Unlike a credit card, which can accumulate debt and often charges annual fees, a debit card can keep you more accountable financially.

The downside of a debit card, however, is that there are some fees to be aware of. If you spend more than your available checking account balance, your bank may charge an overdraft fee. Additionally, debit cards typically don’t earn you the same rewards that a credit card would.

What is a credit card?

Credit cards allow you to borrow money from your financial institution. Fees can vary depending on the bank you choose, but no matter what, you’re required to pay back what you spent along with interest.

With a credit card, you’ll enjoy several benefits, such as rewards and protection against fraud. Compared to debit cards, credit cards generally have better protection, as credit card companies will readily notify you of suspicious charges or freeze your account in case of fraudulent activity.

If a credit card sounds interesting to you, make sure you can hold yourself accountable regarding your spending. Not making your monthly payments on time means risking debt, late fees, and lowering your credit score. Keep in mind the fees and interest rate you’re expected to pay as well.

Should college students have credit cards?

When you think about buying your first home, a new car, or other major purchases, they may seem far away. However, those milestones will arrive sooner than you think. By planning now and working on being responsible with payments on a credit card, you can help your future self achieve financial goals.

An important part of being financially independent is building your credit score. For most college students, a credit card is their first line of credit, which is a requirement for having a credit score. If you make your payments on time and are aware of your card balance, you can raise your credit score. This score will be important when being considered for a loan if you’re making a big purchase, like a home.

If you think you’re cut out for the responsibility of a credit card and want to build your credit score, a credit card may be your next financial move. However, as a college student, a credit card may seem like a lot to handle. Consider starting out with a debit card to manage your personal finances.

Find The Varsity Account That Works Best for You

No matter which card type you pick, you’ll need to find a financial service that offers convenient checking account solutions. At Varsity, you’ll have multiple checking account types to choose from.

Opening your first ever checking account? Consider putting your funds in an Interest Checking account. If you’re anticipating a steady salary at your first job after graduation,  our Varsity Premium Interest Checking account may be right for you.

Compare and learn about the different digital banking products Varsity offers and open an account as you prepare for this new stage of life.

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