Sallie Mae has launched three new credit cards targeted toward college students and recent grads. While there are already a myriad student credit cards out there to choose from, find out if Sallie Mae’s new cards are right for you.
Dear Cashing In,
I’m currently in my junior year of college and I really want to get my first credit card. I’ve heard about these new cards Sallie Mae has come out with, and I’m wondering if one of them might be right for me. Are they worth it? – Lily
Dear Lily,Most credit cards come from a handful of big banks, such as Citi, American Express, Chase, Bank of America, Capital One and Discover. But newer entrants have also been popping up in recent months, trying to break in, including Goldman Sachs and its Apple card as well as a few Silicon Valley startups.
In the summer of 2019, Sallie Mae joined the ranks as it launched three new credit cards aimed at college students and young adults. The cards are initially available only to Sallie Mae customers, but the company plans to roll them out to the general public by the end of the summer.
But when it does, signing up for one is going to depend on your circumstances.
Sallie Mae cards: What you need to know
Sallie Mae primarily operates within the student loan space, but has since thrown its hat in the ring of credit cards. Let’s take a look at their three cards and their features:
- Annual fee: None.
- Rewards: 1 percent cash back. Plus a 25 percent bonus on your cash back rewards after six consecutive on-time payments.
- Perks: The card offers up to $600 worth of cellphone insurance, a credit limit of $500 for first six months, free access to your FICO score and an instant pause feature.
Aimed at recent graduates, the Accelerate card offers similar perks to the Ignite card, but with a twist.
- Annual fee: None.
- Rewards: 1.25 percent cash back on every purchase, every day. Plus a 25 percent bonus on cash back rewards when you use the card to pay down your student loans.
- Perks: The card offers up to $600 worth of cellphone insurance, free access to your FICO score and an instant pause feature.
- Annual fee: None.
- Rewards: 1.25 percent cash back on every purchase, every day. Plus a 25 percent bonus on cash back rewards earned from your top two spending categories each month.
- Perks: The card offers up to $600 worth of cellphone insurance, free access to your FICO score, an instant pause feature and the flexibility to choose your own bonus category.
One of these cards might be right for you…
Clearly, these cards are designed to appeal to customers who are just beginning to establish their credit. The cash back rewards are fine but nothing special, since the top cash back cards have rates of around 2 percent. But since those cards might not be available to people with no credit record, these Sallie Mae cards might fill that void.
Other features of the Sallie Mae cards are intended to help young credit card users establish solid financial habits. For instance, the Ignite card caps credit limits at $500 for the first six months, and the Accelerate card gives a category bonus for using the card to pay a student loan. The Evolve card is more of a traditional rewards credit card.
Sallie Mae is also touting other card features designed to appeal to young people – including seamless integration with mobile apps that allow customers to manage their cards easily. They also include a cellphone protection plan: If you pay your monthly cellphone bill with the card, you can receive coverage worth up to $600 if the phone is damaged.
…But shop around first
The features of these cards make them appealing to potential customers who are just starting their financial lives. If that describes you, then these cards might be worth a look.
As usual, you should shop around online and see if there are other student credit cards that might fit your circumstances better. If you’re just starting out, don’t be too focused on rewards. The higher priority is ensuring you use credit wisely, paying off your balance in full each month. If you mismanage your finances, late fees and interest will eclipse any meager rewards you might earn.
Keep in mind that if you have a limited credit history, you might not qualify for the best rewards cards. So going with starter cards like Sallie Mae’s can be a sensible approach that allows you to build credit over time.