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What you need to know about student credit cards
It’s easy to dismiss student credit cards as having limited benefits, because they are reserved for people who are new to credit. In reality, they’re just as valuable as general rewards cards – but with some functionality specifically tailored to students’ credit-building interests. Here’s a deeper dive into our top picks for 2019 and insight on how you should be approaching credit as a student.
Table of contents:
How we chose the best student cards
There are a bunch of factors that power our proprietary Bankrate Score, but some credit card features are weighted more than others. The best student cards make it easy to build credit: They have no annual fee or penalty APR. Here’s a list of the top factors we used to evaluate and score student cards, in order of importance:
- APR rates: Variable APR and penalty APR (the interest you pay if you miss a payment) can be high and compound quickly.
- 0% Intro APR offer term length: A long period at 0% APR means that you can charge a large expense (such as a new laptop) to your credit card and pay it off over time without incurring interest.
- Intro bonus and card perks: Great student cards should offer useful perks, like cash back on certain categories like gas and groceries.
Recap of our top picks for the best student cards for 2019 spring semester
|Discover it® Student chrome
||Gas, dining & large purchases
|Journey® Student Rewards from Capital One®
||Flat-rate cash back and studying abroad
|Discover it® Student Cash Back
||Rotating cash back bonus categories
|Citi Rewards+℠ Student Card
||For everyday spending
|Deserve® Edu Mastercard for Students
||Best for Amazon Prime membership
|Self Lender — Credit Builder Account
||Best for credit building
Deeper details on each of the best student credit cards
Discover it® Student Cash Back
This student card can produce an extremely lucrative first year of cash back for savvy spenders. Earn 5% cash back in rotating categories each quarter, such as gas stations, grocery stores and restaurants, up to the quarterly maximum each time you activate. Earn 1% unlimited cash back on all other purchases. Any student can benefit, since there’s no annual fee and a $20 reward for each year you maintain a 3.0 GPA up to the next 5 years. But those who don’t mind putting in a little strategy can really earn big. Maxing out the quarterly bonuses before the rewards rate drops from 5% to 1% will result in $75 in rewards each quarter.
Why recommend this card to other students?
This card is essentially the same as the Discover it® Cash Back. But students don’t have to worry about having a credit history to be approved. And Cashback Match, where Discover will automatically match all of your cash back earnings from your first year, is a great bonus.
Journey® Student Rewards from Capital One®
The Journey card has no annual fee and offers 1% cash back on all purchases, but you can boost that to 1.25% if you pay your bill off on time. That’s a pretty sweet deal for those who spend on school supplies and gas, while also being fairly new to building credit. On top of that, enjoy Eno®, your Capital One® assistant, to manage your account via text, receive alerts, and shop safer online.
Why recommend this card to other students?
Paying no foreign transaction fees on this card really sets it apart for student value. Take it abroad, pay your bill in full every month—your credit limit may even increase after 5 months of on time payments.
Discover it® Student chrome
Discover’s chrome card for students earns 2% cash back on up to $1,000 in purchases at gas stations and restaurants per quarter. For everything else, you’ll earn 1%. Although that may not seem like a huge rewards rate, keep in mind that if you’re a student looking to build credit, the roughly $20 in rewards you earn every quarter will be a pleasant surprise you can count on for as long as you’re using the card (and reaching the spend cap of $1,000 per quarter).
Why recommend this card to other students?
Similar to the Discover it Student Cash Back, this card is essentially identical to the Discover it® chrome, only you receive a good grades reward that stretches over 5 years. And your cash back earnings will automatically be matched at the end of your first year with the card.
Citi Rewards+℠ Student Card
With the Citi Rewards+ Student Card, you’ll receive 2 ThankYou® Points per dollar at supermarkets and gas stations (for the first $6,000 spent each year, then 1 point) and 1 ThankYou® Point per dollar on everything else. Enjoy paying zero percent APR for 7 months on new purchases (then 16.74% – 26.74% variable).
Why recommend this card to other students?
While this card does call for good/excellent credit, you get a 10-point round up on every purchase you make (meaning your $2 coffee can earn you 10 points rather than 1). One of the coolest perks of the card is its 10% Points Back feature – you’ll get 10% of your ThankYou® Points back on the first 100,000 points redeemed each year.
Other notable options for students looking to build credit:
Deserve® Edu Mastercard for Students
Students earn an unlimited 1% cash back on every purchase made with this card. Although that’s a modest rewards rate, it’s a nice benefit in the context of every other perk this card offers. Cardholders are eligible for up to $49 (lifetime total) for Amazon Prime Student, as well as ID theft protection, price protection, and other Mastercard Platinum benefits. It’s also another card without foreign transaction fees, so take it abroad with you.
Self Lender — Credit Builder Account
Self Lender’s Credit Builder Account is a unique offering in the student credit category. It doesn’t offer cash back or perks on category purchases, but instead offers help in securing a small loan to deposit in a Certificate of Deposit (CD) bank account. For college students in their second or third year especially, this is a huge asset when it comes to unlocking a nice fund upon graduation. Your loan will sit in the CD account for 12 or 24 months, and after that, you will be able to withdraw more than you initially put in.
What are student credit cards and how do they work?
It’s common for young people, especially college students with mounting loan debt, to be apprehensive about applying for credit cards. In fact, 47% of college students age 18-24 don’t have a credit card simply because they want to avoid debt as much as possible, according to research from Sallie Mae and Ipsos. With a better understanding of credit and how a student credit card can benefit you in the long run, you’ll see that if you are a good candidate, applying for a student credit card is a wise first step in long-term financial wellness.
Student credit cards provide you with a line of credit, usually $1,000 or less. When you use the card, money isn’t directly drawn from your bank account. Instead, the issuer (Capital One, Discover, etc.) pays for the expense and records the amount you charged. The total amount you owe to the issuer is called a balance.
If you pay off the balance in full and on time every month, you’ll never owe more than what you spent. Though, credit card issuers allow you to make small “minimum payments” and carry the rest of the balance month-to-month. When you carry a balance, you’ll have to pay interest on the total amount. Your interest rate is also known as the Annual Percentage Rate or APR. APRs vary across all credit cards, but with a student card, you can expect your rate to be 14-25%.
Why get a student credit card?
Some people start out using their parent’s cards as an authorized user, in order to ease into the credit world and kickstart a credit history. However, that’s not an option for everyone. Getting your own student credit card allows you to take a step toward financial independence. The best part is you don’t have to be a big spender. You can start by paying your rent or internet bill – or even buy next semester’s books.
Here are some good use-cases for your student card:
Build good habits
Using your credit card to buy a meal or your morning coffee throughout the week will get you in the habit of using your credit card regularly, paying your bill on time and accruing rewards.
Grab perks for making larger purchases
Charging larger expenses to your credit card, such as flights for a spring break vacation, can be a great way to earn travel rewards and benefit from some of the perks (such as rental car collision insurance and lost luggage insurance). These benefits are great, so long as you have the income to pay your bill. Incurring interest will vastly negate the travel rewards or cash back you would earn by using your card.
Cushion for emergencies
A credit card can be a great resource in your wallet in the case of emergencies. It’s good to establish clear boundaries for what constitutes an emergency and what doesn’t. (No, the late night pizza craving isn’t an emergency.) If your car breaks down, you need a hotel room after your flight gets canceled or you need to pay a medical bill after a trip to the ER – your student card can be a much needed cushion. Just make sure to pay your bill before you begin incurring interest.
Credit card terms students should know
- Annual Percentage Rate (APR): Interest rate paid on balances carried from one billing period (month) to the next.
- Penalty APR: The highest APR that will be applied to your account. Penalty APR is usually applied after you miss consecutive payments. To return to your original APR, you’ll need to make 6 consecutive on-time payments.
- Credit Utilization Ratio: This ratio is a measurement of how much of your available credit you are using. If you have a $5,000 credit limit and usually stick to a $500 per month budget, your ratio is at 10%. The lower your ratio is, the better. If you use up a large chunk (or all) of your available credit every month, your credit score may decrease.
- Annual fees: Some credit cards have annual fees of $50 or more, though most student cards do not. Be sure to check for fees before applying for any card.
- Credit bureau: Research entities that compile all of your credit history reporting to generate your credit score. In the US, there are 3 major bureaus—Equifax, Experian, and TransUnion.
- FICO: The entity that creates the scoring model used to create credit scores. FICO credit scores range from 300 to 850, with 850 being the best. Credit scores are one factor in determining your creditworthiness.
How students can avoid getting into credit card debt
If you’re spending time gathering information on credit cards for college students, you’re already using the first good strategy for avoiding credit card debt:
- Do your research. Credit cards have a lot of terms and conditions. It’s wise to understand exactly what kind of card you need and find a card that best meets those needs. If you don’t own a car and you rarely dine out, it’s probably not in your best interest to apply for a rewards card that offers cash back on gas and dining purchases.
- Pay off your balance in full every month. It may seem obvious, but the only way to avoid paying more than you have to is by paying in full every month. Some credit cards will let you choose your own due date, others will establish one for you. Make sure you note when your credit card bill is due and stick to your payment schedule.
- Exercise caution when paying tuition with your credit card. It’s best to not use your credit card to pay for tuition, but some schools will allow you to do so. However, be aware that you’ll be charged a convenience fee of about 3% that’s added to your bill. You risk getting into credit card debt when these extra charges affect your everyday spending and eventually dismantle your budget.
- Look for introductory offers. If you absolutely need to make a larger purchase, and you carry a balance, look for a student card with a 0% introductory APR. Some cards have zero percent APR for the first several months. During that time, you can make one large purchase and gradually pay it off without any interest.
- Use your card for everyday convenience. Don’t just focus on the big purchases. Use your card to pay for food, utility bills, movie tickets, and other small purchases. Having a credit card is incredibly convenient and a positive thing when you use it properly.
Expenses for college students obviously go far beyond tuition. The College Board reports that the average on-campus student at a public, four-year, in-state university spent $1,250 on books and supplies in 2017-18. With the aid of a student credit card, the burden of those secondary expenses can be lessened and fit within a budget and schedule that works for you.
Steps to applying for a student credit card
The first thing to consider before applying for a student credit card is your credit history. Start by answering the following questions:
- Have you ever had a credit card?
- Have you ever taken out a loan?
- Do you have a steady work/income history?
If you have never had a credit card and you currently have no loans or steady income, your best option for getting your own credit card account is to become an authorized user on a pre-existing account. An authorized user is in a good position to benefit from the cardholder’s (usually parents) habits, while not having to carry the responsibilities of paying the card balance.
If you already have a credit history, it’s important to know what your score is. Determining your credit score will let you know which cards you are likely to be approved for. Every time you apply for a credit card, your score will briefly drop by about 5 points, so it’s best to do it as few times as possible. Applying for cards you are declined for will still negatively affect your score.
First, request copies of your credit report, which you can do for free once a year from each of the three credit bureaus. You can also get a free credit report and credit score here.
Also, consider the following:
- Credit cards usually have foreign transaction fees. If you plan on studying abroad, take a look at foreign transaction fees, which can vary from 2-4%.
- You should only apply for one card. Applying for several cards at once indicates risk and tells credit card issuers that you are desperate for credit. Do your research and stick to one application. If you’re denied, take steps to improve your credit (pay down other cards, loans, etc.) and apply for another card in a few months.
Once you have pulled your credit report, checked your credit score, and narrowed your search to one perfect card, you’re ready to apply.
Additional reviews and research
Need to do more reading before you make a decision? No worries, choosing the right credit card as a college student is a big deal. We’ve reviewed pretty much every major student credit card on the market today, with all the latest offer information and in-depth analysis. Check out all of our latest reviews below.