Here's What Every College Student Should Know About Credit Cards

Building your credit is like training for a marathon. It's about doing everything right over and over again for many years. Accomplish that and you'll reap the rewards in the form of low-interest rates on financial products, such as credit cards, mortgages and auto loans.

The problem is that laws passed a few years ago have made it harder than ever for college students and other young people to get to the starting line of that marathon. But the good news is that if you do your homework -- and are perhaps willing to have a potentially awkward conversation or two -- you should still be able to get that first credit card and get on your way to a lifetime of good credit.

[See: What to Do If You've Fallen (Way) Behind on Your Credit Card Payments.]

The game-changer. The Credit CARD Act of 2009, the most sweeping regulatory changes in the history of the credit card industry, impacted millions of American credit card holders. No group was perhaps affected quite as much as those under the age of 21. Before the act's passage, credit card issuers were regulars on college campuses, offering freebies such as T-shirts and hats in exchange for signing up for a credit card. Dorm room mailboxes were frequently stuffed with unsolicited card offers.

That's no longer the case, thanks to the CARD Act. And that's generally a good thing. Too many young people signed up for cards for the wrong reasons and ended up getting themselves in a heap of debt trouble.

Of course, none of this means that college students can't get a credit card. The rules are just different.

Here are the two biggest things college students need to know before they apply for that first credit card.

-- Today's credit card offers targeting students feature better rewards and other perks than ever before.

-- In order to get one, you need to either show proof of income, get a co-signer or become an authorized user on another person's account.

[See: 10 Fun, Frugal Ways to Spend Your Free Time.]

Best offers ever. In the hyper-competitive credit card marketplace of 2016, banks are falling all over themselves to attract new customers. Students are no exception.

For example, Discover It Chrome For Students offers:

-- 2 percent cash back at restaurants and gas stations, up to $1,000 per quarter. Plus, 1 percent back on all other purchases.

-- Double your cash back earned at the end of the first year.

-- A $20 cash back bonus each school year in which your grade-point average is 3.0 or higher.

-- No annual fee and no fee the first time you pay your bill late.

-- It offers 0 percent APR on purchases for the first 6 months. After that, it offers 13.24 percent to 22.24 percent.

That offer is competitive with most other cash back cards in the marketplace, whether they're aimed at students or not. It's the type of offer that students 15 to 20 years ago would likely not have seen, and there are more. The Citi Thank You Preferred Card For College Students offers 2,500 bonus Thank You points after spending $500 in the first three months and two points per dollar spent at restaurants and on entertainment. Wells Fargo's Cash Back College Card gives 3 percent back on gas, grocery and drug store purchases for the first six months and 1 percent back on everything else.

To be sure, these cards are not perfect. All of the above cards have APRs that range up to 20 percent or higher. However, if you can pay off your balances each month -- admittedly easier said than done for a typical college student -- you can make that APR a moot point by not paying any interest at all.

[See: 12 Habits to Help You Take Control of Your Credit.]

Providing proof that you can pay. Before you can take advantage of any of those offers, you have to actually get the card, and that's not as simple as it used to be. You either have to prove that you have sufficient income -- be it from a job, regular allowance from your family or some other source of funds -- or you have to get a co-signer or become an authorized user on another person's account

If you become an authorized user on an account, you're neither the primary borrower nor a co-signer, you bear no liability for repayment of balances and typically all of the positive information associated with that account will appear on your credit report, jump-starting your credit in the process. However, not all banks allow authorized users on credit card accounts. Plus, different credit card issuers have different policies on reporting authorized user activity to credit bureaus, so do your homework before signing on or you might find that the arrangement doesn't help your credit much, if at all.

The other option, co-signing, is when you get someone with a more established credit history, such as a parent, to jointly open a new card account with you. Before you enter in to a co-signing agreement, it's important to know that if you get a co-signer, that person is also accepting responsibility for payment, even though you may be the one racking up the charges. And if you, the primary borrower, are late with a payment, your co-signer's credit will be hit, too. If the account goes into default, both parties will be responsible for paying the balance. This makes co-signing a big deal. It also means that, despite people's best intentions, many of these agreements end in a messy fashion. (A recent CreditCards.com survey showed that 26 percent of co-signers said co-signing damaged the relationship with the person they co-signed for.)

Co-signing doesn't always turn into a disaster, though. The best way to avoid trouble is through honest, open communication before the deal is done. Make sure all parties know their responsibilities and the consequences of failing to live up to those responsibilities. It's best to discuss these things in advance, long before any signs of trouble.

However you end up getting access to the card, it's vital to handle it well once you have it. People with good credit get the best terms on mortgages, car loans, credit cards and more. And the longer your good-credit track record is, the more likely you are to qualify for those terms.

Matt Schulz is the senior industry analyst at CreditCards.com, a site dedicated to helping people make smart decisions about obtaining and using credit. You can follow him on Twitter at @matthewschulz.