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What Students Need to Know About Credit Cards
Updated: June 19, 2018
The best student credit cards help young adults build credit, learn good spending habits, and even reap rewards for good grades in college. Many major credit card issuers, like Chase, Citi, Discover, and Capital One, offer cards specially designed for students with little to no credit history. Use a student credit card responsibly, and you’ll be on your way to building a foundation of solid credit before you graduate.
Find the perfect student credit card for you by exploring top offers. Note that there are federal restrictions on issuing credit cards to individuals under 21.
In this guide to college student credit cards, you’ll learn:
Learn more about building your credit as a college student!
CreditCards.com's Best Student Credit Cards of 2018: Editor Ratings
Our experts at CreditCards.com analyzed 109 student credit card offers to find the top recommendations. Below are our picks for the 5 best student credit cards. The Discover it Student chrome and Discover it Student Cash Back top our list because of their rewards rates and special perks for students.
|Best For:||Credit Card||Annual Fee||CreditCards.com Rating|
|Rotating bonus categories||Discover it Student Cash Back||$0||3.9 / 5|
|High cash back rates on common student purchases||Discover it Student chrome||$0||3.9 / 5|
|No foreign transaction fees and studying abroad||Journey Student Rewards from Capital One||$0||2.2 / 5|
|Additional perks like free Amazon Prime Student||Deserve® Edu Mastercard for Students||$0||1.1 / 5|
|Sign-up bonus and rewards for going out||Citi ThankYou Preferred Card for College Students||$0||2.4 / 5|
Our research methodology
Student credit cards analyzed: 109
Criteria used: Annual fee, regular APR, foreign transaction fee, other rates and fees, rewards rates, rewards categories, sign-up bonus, redemption options, student-specific benefits, customer service, ease of bill pay, ease of application, credit needed, security
Details on our picks for the best student cards
Discover it Student Cash Back
The Discover it Student Cash Back offers much of the same terms as its chrome variant, including no annual fee and good grades rewards. While the good grade reward amount and APR values matched those of the Discover it Student chrome, the cash back does function differently with this card. With the Discover it Student Cash Back, you can enroll every quarter to earn 5% cash back on rotating categories (up to $1,500 in purchases per quarter). You'll also earn unlimited 1% cash back on everything else.
Note that unlike the chrome, the regular Discover it Student Cash Back has rotating categories and does require enrollment each quarter. But, it also offers a higher rate of 5% cash back (on up to $1,500 quarterly) on those categories. When asked to pick the best credit card for students, our experts were torn between these two cards. The reality is they are both superb credit cards, especially for cash back; so the decision will come down to your personal spending preferences. If restaurant and gas make up a large portion of your purchases, then go for the Discover it Student chrome. If you spend on a wider variety of categories, then the Discover it Student Cash Back is a great option.
Finally, it should be noted that both cards will automatically match all cash back you earned in your first year, effectively doubling your earnings for the year.
Discover it Student chrome
A cousin of the Discover it Student Cash Back, the Discover it Student chrome offers many of the same features and perks: no annual fee, no APR changes for late payments, and "good grades rewards." While those first two features shouldn't be taken for granted, a reward for good grades is definitely one of the more intriguing – and unique – perks among credit cards. Specifically, the Discover it chrome gives you a $20 statement credit for every year you finish with a 3.0 GPA or better, up to 5 years.
Where the Discover it Student chrome differs from its non-chrome variant is in how its cash back works. Whereas the regular Discover it Student Cash Back lets you earn cash back on categories that rotate each quarter, the chrome has a flat cash back rate with fixed categories: 2% at restaurants and gas stations (on up to $1,000 combined per quarter), and 1% on everything else (unlimited). There's no need to remember changing categories or sign up to earn cash back, making it an ideal card for students who make frequent purchases on dining and gas.
Journey Student Rewards from Capital One
The Journey Student Rewards card from Capital One provides all of the solid basic features you'd expect from a credit card for students, and also adds on some desirable perks to boot. One of the most important reasons to get a credit card as a student is to build up your credit, and the Journey offers access to a credit line increase after paying on time for your first 5 monthly bills. Paying on time is also made easier by the fact that you are allowed to choose your own monthly due date.
Additionally, the card earns you 1% cash back on all purchases – this cash back rate actually goes up to 1.25% if you pay on time, a nice incentive for young cardholders to build good financial habits. It also comes with no annual fee, no foreign transaction fee, and even fraud coverage in the event your card is lost or stolen. With its flexibility, lack of fees, and solid cash back offering, the Journey Student Rewards from Capital One makes for a worthy first credit card in any student's wallet.
Deserve® Edu Mastercard for Students
The Deserve Edu Mastercard is another great options to help build your credit history while earning unlimited 1% cash back. Like our other top picks, it comes with no annual fee, helping keep money in your pockets for tuition and ramen purchases. It also offers some benefits that are hard to come by – for instance, a $49 credit for your Amazon Prime Student membership.
As part of the Mastercard network, the Deserve Edu student card provides its fair share of perks, including no foreign transaction fees, price protection, travel assistance, extended warranty, and ID theft protection. Perhaps most surprisingly, it offers a credit line of up to $5,000 which is quite high among student credit cards, even as an upper limit.
Citi ThankYou Preferred Card for College Students
The Citi ThankYou Preferred Card for College Students boasts a feature that is rare among student credit cards: a sign-up bonus. After making $500 in purchases in your first 3 months, you earn 2,500 ThankYou points that are redeemable for a $25 gift card. While this isn't the meatiest sign-up bonus in the world, it's still a solid chunk of change that's good for a couple movie tickets or Cards Against Humanity.
Of course, the sign-up bonus isn't the only notable feature of this Citi card. It also earns 2 points per dollar spent on dining out and entertainment, and 1 point per dollar on everything else. There are no limits or expirations on these points, so you can confidently rack up the earnings.
What Our Experts are Saying
Stefanie O’Connell, millennial personal finance author
Favorite student card: Discover it® Student Cash Back
"With low interest rates, no annual fee and valuable tools to help new credit users keep track of their payments and build their credit, The Discover it Student Cash Back credit card is a great option."
Michelle Schroeder-Gardner, MakingSenseofCents.com
Favorite student card: Discover it® Student Cash Back
"What do good grades and your credit card have in common? Did you know that you can earn money for your good grades? The Discover it® Student Cash Back card gives you a $20 statement credit each school year your GPA is 3.0 or higher for up to next five years."
Rebecca Lake, personal finance journalist
Favorite student card: Discover it® Student Cash Back
"Discover it Student Cash Back is my top pick, based on rewards earning potential and other card perks. The rotating 5 percent quarterly cash back rewards bonus* offers students variety in terms of where they can max out their cash back earnings, and they still get the benefit of unlimited 1 percent cash back on non-bonus category spending."
Matt Schulz, senior industry analyst, CreditCards.com
Favorite student card: Discover it® Student chrome
"The Discover It Student chrome card really keeps its target audience in mind. It gives you a $20 statement credit every year your GPA is 3.0 or higher**, along with matching all the cash back you earn at the end of the first year with the card. More important, however, it promises that students won't get hit with a penalty fee the first time they're late with a payment. Lastly, there are no rotating bonus categories to worry with. Students are busy enough as it is, and Discover seems to recognize that."
* Up to $1,500 per quarter; enrollment required
** Up to the next 5 years
How credit cards work
Credit cards provide you with a line of credit that can be used anywhere credit cards are accepted. Credit is essentially borrowed money from the card issuer, usually capped at a dollar amount (known as your credit limit). All credit cards carry an Annual Percentage Rate (APR), also known as the card’s interest rate. You’re not obligated to pay your entire credit card bill in full every month, but if you carry a balance, you’ll accumulate interest based on your APR.
Credit cards do have varying monthly minimum payments, which you need to pay every month. Failure to make minimum payments can raise your APR and potentially incur fees.
By paying bills on time and using credit wisely, you can improve your credit score, which indicates creditworthiness. A higher credit score can also help you get approved (and get lower rates) when buying a home, car, or taking out a loan.
Use the loan savings calculator on myFICO.com to see the impact your credit score has on rates. As an example, let’s say you take out a 48-month new auto loan on a $20,000 car. With a fair credit score of 600, your APR may be as high as 13.948%. By the time you have paid the car off, you will have paid over $6,000 in interest. With a good credit score of 700, your APR may be as low as 5.149%, which equates to just over $2,000 in interest.
- Credit cards are for convenience and building credit. College students should use credit cards as short-term payment options on small purchases. Steadily building credit by spending responsibly will not only help build good habits, but prove creditworthiness later on.
- Late payments will drop a credit score. Even if you’re paying your credit card bill in full, if it’s late, it can negatively affect your credit score. It’s far easier for a credit score to drop than it is to raise.
- Don’t use a student credit card in place of a loan. Although most credit cards offer 0% introductory APR, using a credit card in place of a loan will create a long-term issue. The interest you end up paying will offset the benefits of the initial loan, and you may have difficulty upgrading your student credit card later on.
How college students can build credit
Building credit for a college student can be simplified into three steps:
- Checking your credit report and score.
- Selecting the right card for you and applying.
- Paying credit card bills on time and in full.
Credit reports are generated by the three major credit bureaus (TransUnion, Equifax, and Experian). TransUnion reports can be pulled for free every month at CreditCards.com. Free reports can be pulled from all three bureaus once a year at AnnualCreditReport.com.
FICO and VantageScore use the three credit reports to generate your credit score. You can check your VantageScore for free at creditcards.com or all three FICO scores for about $20 each at myFICO.com. Many credit card issuers also offer free credit report monitoring. Credit scores range from 300-850, with 850 being the best. For college students looking to build credit, maintaining a score of at least 670 is generally considered “good.”
FICO Credit Scores
|Poor||579 and lower|
Why college students should have a credit card
Using a credit card regularly and responsibly is the simplest way to build credit. And later on, building credit makes it easier to get a loan for big purchases like a car or a home . During young adulthood, expenses tend to be fewer and more manageable—take advantage of this time to focus on credit growth.
Many student credit card accounts can eventually be upgraded, pending good credit history.
How to get your first credit card
When you’re ready to get your first credit card, do your homework. Check your credit reports, find your credit score, and research cards that fit your needs. There are a number of student credit cards available, most with unique features and conditions. Take special notice of annual fees, rewards offered, and APRs.
Narrow your selection and apply to only one card. Every time you apply for a credit card (this is called a “hard pull”), it’s noted on your credit report. Multiple applications can negatively impact your credit score and make it more difficult to get approved for a card.
Once you have been approved, limit your spending to manageable balances and pay the bill in full and on time each month.
Keep in mind:
- To be approved for your own card, you need a source of income. Otherwise, you may consider being added to a parent’s credit account.
- Even if you have income, without credit, you might still be denied. Consider starting with a secured card. Secured cards require a deposit and will generally come with lower spending caps, but they help college students slowly boost their credit scores.
Understanding your credit card's features
All credit cards share similar properties, but especially in the case of student credit cards, specific features can vary greatly. Take the time to discover the conditions your card carries and you will be in a better position to take full advantage of your credit.
Key features to take note of:
- APR — The annual percentage rate is the interest you will be charged on balances carried from month to month. If you pay your credit card balance in full every month, you won’t be charged interest. Most student credit cards offer 0% introductory APR for the first year or so as an added incentive.
- Credit limit — The credit limit is the maximum dollar amount you can charge to your charge in any billing period (typically a month). For most student credit cards, the limit is $1,000 or less. If you pay your bills on time, card issuers may increase your limit.
- Rewards — Many credit cards, student cards included, offer rewards to the user. Rewards include cash back, points, and sign-up bonuses. Cash back is simply a percentage of the charges you make credited back to your account. Rewards points can usually be redeemed for gift cards, electronics, and other prizes. Consider your spending habits and make sure to apply for the card that offers you rewards that are most relevant to you.
Unique advantages of student credit cards
Student credit cards are specifically tailored to college students and their unique financial position. Unlike secured credit cards, true student cards don’t require deposits, or “down payments.” Although they may carry higher APR than other credit cards, student cards don’t require good or excellent credit. This spells the perfect scenario for young people:
- Gain access to credit from major credit card issuers, in spite of little or no credit history.
- Benefit from special rewards like bonuses for good grades.
- Practice good budgeting and spending habits.
The true cost of credit cards
Most college students are aware that credit cards carry an interest rate, though not all are cognizant of the various additional fees. These include:
- Annual fees. Though most student credit cards do not have annual fees, many rewards cards typically do. This fee is usually $50-$500.
- Balance transfer fees. When opening a student credit card, transferring an existing balance from a different card onto it is not advised. One can take the debt from one credit card and transfer it to another, though doing this usually comes with a “Balance Transfer APR.”
- Cash advance fees. Users can pull cash from their credit card, usually with an extremely high APR.
- Foreign transaction fees. Planning on studying abroad? Note that many cards have foreign transaction fees. Using your new credit card outside of the US will cost you extra, usually at a rate of a few percent more per purchase.
Beyond traditional fees, there are penalty APRs that come into effect when minimum payments are not met for three consecutive months. Penalty APRs are usually the highest interest rates credit card holders will experience. Also, note that failing to pay off your balance can negatively affect your credit score and rack up interest charges and potentially late fees.
Let’s say you use a credit card which carries a 24.99% variable APR. If you spend $300 in the first month and choose to pay off your balance on time, you will pay a total of $300. If you fail to pay on time, your balance will accumulate interest. Next month, before spending any money at all, your balance will be $374.97 ($300 + $74.97 interest).
The bottom line — Use your credit card for convenience on small purchases and pay it off every month. Do this and you’ll avoid overwhelming credit card debt and a damaged credit score.
Types of student credit cards
Student credit cards usually fall into one of two categories:
- Rewards credit cards — Rewards credit cards offer students cash back (usually at 1-1.5%), bonuses for good grades, and even points that can be redeemed for airfare and more. Although rewards credit cards don’t require a stellar credit history, they will require that you have a source of reliable income.
- Secured credit cards — Secured credit cards require a deposit in the same amount as your given credit limit. If you have a history of poor credit, a secured card is a great way to gradually improve it. The APR is typically quite high, so paying off the balance in full each month is strongly advised. With responsible spending, secured cards can eventually be upgraded to regular, unsecured cards with higher credit limits.
Expenses to put on your Student Credit Card
Although most student credit cards already come with very low credit limits (usually under $1,000), don’t feel that you need to, or should, spend that every month. In fact, maxing out a credit card every month can harm your credit score.
Anthony Sprauve, spokesman for myFICO.com, indicates that people with scores of 750 and above use an average of 7 percent of their available credit. Although those with higher credit scores tend to have higher credit limits, it is still an important lesson to learn. Sprauve says, “...if people stay somewhere between 10 and 20 percent range, that’s a good place to be.” By utilizing less of your credit limit, you’re indicating that although you use credit, you’re not overly reliant on it.
While in college, use your credit card for convenience on small expenses, like:
- Occasional purchases from online retailers like Amazon
Avoid making large purchases on your student credit card, like:
Using a credit card in college is about keeping bills manageable and slowly building credit. If after pulling your credit report and checking your credit score, you feel you are likely to be approved for a student credit card with rewards, all the better. If not, use your first credit card as a stepping stone to the future.
Resources for Learning about Credit & Financial Responsibility
Although the finer points of credit, debt, and fiscal management can be difficult to understand, introducing the topic to children and teens is a smart way of getting ahead of the issue. Building a solid foundation of understanding and responsibility is the best way to get off on the right foot.
As an issuer, Discover does a great job of providing resources for students who are just beginning their credit history. Visit their college credit cards page to learn more about saving money while in school and how to best use a credit card.
CreditCards.com also has a number of valuable financial literacy resources for parents and children of all ages.
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