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Many students get their first credit cards when they go to college. With traditional credit cards, you normally need a high credit score to get approved for a new card. This is difficult for college students, who rarely have an established financial history. Fortunately, there are several credit cards aimed specifically at students. Not only do these student credit cards lack the usual requirements, but they are designed to help ease students into having a credit card. It also gives students an opportunity to build up their credit score for after graduation.
The eligibility requirements vary depending on the card. Despite the name, not all student credit cards require you to be a student. Student credit cards typically have minimal rewards and incentives compared to traditional credit cards. They also have smaller lines of credit, with minimal opportunities to increase the total credit line. As with traditional credit cards, you must pay attention to interest rates and annual fees when signing up for a student credit card.
Benefits of College Credit Cards
The biggest benefit of having a credit card in college is the ability to build up a credit score. In the past, it was considered irresponsible to give students credit cards. Parents were afraid their children would make irresponsible purchases. In reality, this caused students to graduate with minimal financial knowledge and a lack of credit history. This makes it much harder to get loans, set up utilities or rent property.
Several student credit cards also provide incentives to do well in school, offering small rewards if you maintain a certain GPA. Many student credit cards also include a free credit check at the end of the year, giving students an idea of how to build their score.
Making the Most of a College Credit Card
College credit cards provide many benefits, but you must wisely use your card to maximize these benefits. The key to building credit is making payments on time. The best rule of thumb for students is never charge more than you can afford to pay at the end of the month. Even if you are only required to make a small minimum payment, this keeps you from falling into debt. Many students place a limit on how much they spend each month, even if this self-imposed limit is lower than the total line of credit.
When you are making payments, try to pay more than the minimum whenever possible. This not only helps limit your debt, but it can help your credit score grow faster. It also provides greater peace of mind.
You must be mindful about using your rewards, especially sign-up bonuses. Many students make the mistake of opening too many accounts to try and maximize the number of sign-up bonuses. Opening too many accounts at once can hurt your credit score. It also increases the temptation to make purchases, since you can charge each one to a different card. It becomes harder to maximize on other rewards as well, since most require you to continually use that specific credit card.
Discover Student Cash Back
Discover has one of the best student credit cards available in 2021. What sets Discover apart from other student credit cards is the number of benefits and rewards, as well as the low eligibility requirements. No credit history is required, and Discover does not charge any annual fees. The interest rates vary slightly if you have an established financial history. Each quarter, you can receive 5 percent cashback on select purchases, and 1 percent on all other categories. You can access your online account to see what quarterly benefits are available.
You also receive a first-year cashback match. There is no minimum amount you must spend to activate this benefit. For the first five years you have your Discover card, you can earn $20 at the end of the school year if you maintain at least a 3.0 GPA. You also receive an end of the year credit scorecard, letting you see how much your credit score has changed over the year. There is also no penalty on your first late payment. Finally, Discover has some of the best security features, scanning the dark web for instances of your Social Security number and automatically notifying you and temporarily freezing your account if there is suspicious purchase history.
Capital One SavorOne Student Cash Rewards
At a glance, the SavorOne credit card is easy to overlook. It does not offer any sign-up rewards and it has slightly higher interest rates than most other college credit cards. However, SavorOne is an excellent card to build up credit. After six months, you are automatically considered for an increase in credit. The rewards are also simple and do not change quarterly. Instead, you earn a straightforward 3 percent back on dining, entertaining, grocery stores and streaming services. Any other purchase earns 1 percent. SavorOne also has no annual fees, excellent autopayment options and free fraud liability.
Bank of America Travel Rewards for Students
One of the issues with college credit cards is there are normally foreign transaction fees and an increased annual fee if you study abroad. Bank of America’s travel rewards card does not feature any of these fees, and even provides students with a free 25,000 reward points after creating an account. You also earn an additional 1.5 points for every $1 you spend. While the card is largely marketed at students traveling abroad, it is still a viable credit card if you plan on attending college locally.
Deserve EDU Mastercard
Deserve is another college credit card without any annual or foreign transaction fees. It has smaller cashback rewards compared to other cards, only allowing a maximum of 1 percent back on all your purchases. However, if you spend $500 within your first three billing cycles, you receive a year of Amazon Prime for free. There is also a generous referral program, which rewards you with $30 per referral. Deserve members also receive free cell phone protection, up to $600. You can also see if you prequalify without hurting your credit score.