Secured Credit Cards for College Students

A good friend of mine by the name of Kevin has a son going off to college this year. He trusts my opinion when it comes to finances.

I don’t claim to be a finance guru, but I’m very confident in my knowledge of personal finance. I have definitely done my share of research in the field; and have had my share of experiences.

Kevin and I go fishing about two to three times a month throughout the year. It is where we find peace and have a chance to talk about the challenges of life.  We were out of the lake early morning with our fishing lines cast waiting on bite.

We were having one of our usual interesting chats when Kevin ask me for advice about getting KJ, his son, ready for college.

I said, “I will leave college preparation up to you and the Mrs. being that both of you are college grads. The best advice that I could give KJ is for him to obtain a secured credit card and use it responsibly.”

Kevin asked, “What do you mean by a secured credit card?” I said, “Sit back and enjoy the calmness of the lake and let me explain in detail what a secured credit card is and why it is so important for college students.”

A secured credit card can help KJ establish a credit history. A secured credit card is similar to a regular credit card, but requires a security deposit which becomes the credit line for the account.

For example, if you put $500 in the account, you can charge up to $500. Using the secured credit card will show the credit reporting agencies how financially responsible you are when it comes to credit.

Also, it relieves the lender from any risks associated with lending to consumers who they don’t know is credit worthy. There are a few important steps to take when using secured credit cards.

1) It is very important that you use the secured credit card. Credit reporting agencies want to know how financially responsible you are when it comes credit. Basically, they want to gauge if you are the type of person that pays his/her debts.

2) Pay your bills on time. Make sure that when you pay at least two weeks in advance.  This lets the lenders know that you are aggressively trying to pay off your debts. This shows financial stability.

3) Don’t over charge. A good rule of thumb would be to not charge more than 50% of your secured credit card limit. Spending too much gives the lenders the impression that you are not financially responsible enough to use a conventional credit card. Also, it shows early signs of financial hardship.

Kevin, if KJ follows the steps exactly when using the secured credit card, his credit score should be in excellent standing in about 12 months. I almost forgot the security deposit will be refunded to him after the first year.

In most cases, the lenders will convert your secured credit card to a regular credit and increase to credit limit after you have proven that you are creditworthy. If KJ can prove to you that he can use the secured credit card responsibly, I think he can accomplish anything.

I think he will be ready for the real world and all of its challenges. Using the secured credit card does take some discipline.  It can be hard for an 18-21 year old to manage money responsibly. I have known KJ since he was a young kid. I really think that he is up to the challenge.  So, Kevin, that is the best advice I can give to KJ and any student starting college.

Guest Post Bio: My name is Cameron Robinson. I am a member of  I am a financial consultant and professional marketer. I enjoy helping people organize their finances and avoid debt problems.

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Lauren Anderson is a certified school counselor who's passionate about helping students all over the world successfully transition from high school to college! After spending 6 years as a business professional, she obtained her Master’s degree in School Counseling and now spends her spare time helping students.

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