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Student credit cards are upping their game: Is it time to apply?

With these new credit cards, you might not want to graduate (to other cards, that is)


The student credit cards landscape is changing for the better, thanks to a few exciting new products.

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Recent credit card trends show that the market is getting more and more competitive. Sign-up bonuses are growing, card issuers are revamping their popular products and rewards rates are increasing.

The trend now has now made its way to the student credit card space.

Traditionally, the goal of student credit cards has been to offer credit card options to college students, an audience who’s typically new to credit. Rewards on such cards have been rather modest, but this seems to be changing.

In the last few months, new attractive student credit cards have flooded the market. Gone are the days when student credit cards were simply learning tools, rewarding responsible credit behavior and good grades. Today, students can earn rewards at rates comparable to those on regular rewards credit cards.

If you’re currently enrolled in college, there’s plenty to be excited about. Let’s talk about these new products and how you can use them to your advantage.

The student credit card market is on the rise

In the last two years, three card issuers, including Citi, Wells Fargo and State Farm, exited the student credit card market, decreasing the number of products available in this niche.

One could interpret it as a bad sign, but in reality, there’s been a lot of exciting news in this category lately.

In the past, student credit cards have been known as products that help young people work on their credit, serving as gateway to more desirable cards. The rewards rates have rarely exceeded 1.5% cash back.

The Discover it® Student Cash Back has ruled the student credit card category, thanks to its generous 5% cash back on rotating quarterly bonus categories (up to $1,500 per quarter, then 1% – enrollment required).

Now, it may have quite a few competitors.

Student cards from Capital One

Perhaps the most exciting additions to the student credit cards category come from Capital One. This week, the issuer announced the launch of the Capital One SavorOne Student Cash Rewards Credit Card – a student version of the popular Capital One SavorOne Cash Rewards Credit Card.

Just like the “grown-up” SavorOne, the SavorOne Student earns 3% cash back on dining, entertainment, eligible streaming services and at grocery stores (excluding superstores, such as Walmart and Target) and 1% cash back on everything else. The 8% cash back offer on Vivid Seats is also available to cardholders through Jan. 2023.

The appearance of a cash back credit card of this class on the student card market is truly notable. It shifts the focus from simply establishing credit to earning rewards.

It’s not about building credit while possibly earning some cash back. Now it’s about earning rewards while your credit is growing (if you use your card responsibly, that is).

Additionally, Capital One has launched the Capital One Quicksilver Student Cash Rewards Credit Card which, in the best traditions of flat-rate cash back cards, offers 1.5% back on all purchases.

Compared to these two new options, the older Journey Student Rewards from Capital One seems uninspiring, with its 1% cash back on everything (boosted to 1.25% when you pay on time). Still, new cardholders can earn up to $60 in streaming service subscription credits paid out in $5 monthly increments in the first 18 months – not a bad perk for a no-annual-fee card that only requires fair credit.

Student credit cards from Bank of America

Bank of America is currently offering two student credit cards: the Bank of America® Customized Cash Rewards credit card for Students and the Bank of America® Unlimited Cash Rewards credit card for Students.

With the Customized Cash Rewards for Students, you can earn 3% cash back in the category of your choosing. You can pick from gas, online shopping, dining, travel, drugstores and home improvement and furniture stores. Additionally, you’ll get 2% back at grocery stores and wholesale clubs and 1% back on everything else.

There’s one catch: The card imposes a quarterly $2,500 cap on combined purchases in the 3% and 2% categories. Once you meet that cap, you’ll earn 1% on all of your purchases for the rest of the quarter.

If you’d prefer a simpler rewards system, look into the new Unlimited Cash Rewards card. Like it’s non-student version Bank of America® Unlimited Cash Rewards credit card – and like the Capital One Quicksilver cards I’ve mentioned – it earns 1.5% cash back.

Both cards charge no annual fee and offer a sign-up bonus of $200 for spending $1,000 within the first 90 days with the card.

Earning rewards with a student credit card

As you can see, the new generation of student credit cards has a lot to offer. Whether you’re earning rewards with the SavorOne Student or keeping it simple with 1.5% cash back on the Bank of America Unlimited Cash Rewards for Students, it’s thrilling to see your cash back earnings grow.

I’m excited for all students out there interested in credit cards, but it’s also important to proceed with caution.

Not that long ago, I was a student myself. I had two credit cards. They both ended as charge-offs. Their ghosts are haunting my credit report in the shape of negative items, dragging my credit scores down.

To avoid being like me, get yourself a nice student credit card, but know what you’re going to do with it.

Here are a few things that can help you avoid costly credit card mistakes:

  • Treat your credit card like cash. If you can’t pay for a purchase today, you can’t afford that purchase. Check your credit card balance multiple times a month and pay it off every time it’s not $0. This will also help your credit by establishing a positive payment history and keeping your credit utilization low – two very important things for your scores.
  • Know your APR and credit card fees. Know them and avoid them, as they not only can become a financial nuisance, but also have a potential to put you in dreaded credit card debt.
  • Make a habit of paying your credit card bill in full. My first piece of advice should make that easy. Plus, carrying a balance will eat into your rewards. That’s why true credit card nerds who travel on points and earn hundreds of dollars in cash back never carry a balance (unless they have a 0% APR card).
  • Avoid applying for multiple credit cards. We’ve discussed some excellent student credit cards, but don’t rush to put them all in your wallet. There’s nothing wrong with having many cards if you use them strategically, but it’s best to wait at least six months between credit card applications. You don’t want issuers to think you’re in financial trouble and fill your credit report with pesky hard inquiries.
  • Educate yourself about credit. Rewards or not, a student credit card is still a convenient tool for credit building. Credit may seem like a complex topic, but its core principles are simple. Learn about them, practice them and soon enough, you’ll be able to graduate to the most popular credit cards.

Bottom line

New student credit card options can compete with general rewards credit cards, offering higher rewards rates than ever before. However, it’s important to know how to use them responsibly. Otherwise, you’re risking getting interest charges and credit card debt instead of cash back.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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