Starting Credit Early! Our Credit Picks for Students.
As a learning, traveling, and frequently starving student, opening a credit card specific to student needs can be a great life choice. Many banks offer student-centric credit cards that are for students with little to no credit history. Having a credit card on hand while earning a degree is a smart way to offset living expenses and open up more opportunities post-graduation. Most importantly, a student credit card is a great way to learn how to build credit at a young age.
Millennial students are facing increasingly large hurdles throughout their academic lives. Even after graduating, there are several issues they may run into while adjusting to post-academic adult life. While in college, many students are facing rising living expenses and tuition. On top of that, it’s tough to obtain a good part-time job to help offset these costs.
Securing a job relevant to your degree post-graduation is no longer guaranteed either. Not earning a wage appropriate to your degree can make it hard to pay loans back. Many students get off to a rocky start early in life, preventing them from saving for emergencies or large purchases like homes and cars.
With a plethora of student credit cards offering appealing rewards, millennial students can be better suited to face these financial issues head-on. Student credit cards provide the ability to save money and learn about personal finances while building credit.
There are several reasons why building credit early on in life is an excellent financial move. For starters, credit history is a defining factor in determining which financial options you’re eligible for in the future. Car loans, personal loans, mortgages, and better credit cards require good to excellent credit history. Having poor credit will exclude you from these financing options. More so they could end up costing you much more in the long run due to a higher annual percentage rate (APR).
Another reason to start early is to learn about personal finances. Not having a grip on personal finances could prove disastrous later on in life as it becomes imperative to make important adult decisions. Learning to use your credit card like a debit card and paying off the statement balance on time teaches money management skills. People who learn to monitor their spendings and don’t make purchases without having the funds available will live financially better lives in the future.
There is no better time to start your credit-building journey than when you’re young. Not having the burden of negative credit history allows you to have the best possible start in building your credit with the best possible bank cards.
What to watch for
It’s important to note that not just any bank card will be ideal for students, even if they advertise it that way. A few things to watch for when searching for the right student credit card are annual fees, a high APR, late payment penalties, and rewards benefits.
Many credit cards will penalize you for missing payments. Late fees can predictably snowball into debt and increased monthly interest charges that are hard to pay back. Also, some cards charge annual fees of up to $100 a year which can put a wrench in your financial plans.
When applying for a first credit card, your initial credit limit could be higher than expected due to your fresh credit history. Don’t be tempted to max out a credit card because of that upper credit limit. Think of a credit limit as a loan amount. You will eventually need to pay back the full balance, including any other fees incurred.
With so many rewarding student credit cards to choose from, it’s worth looking at the rewards benefits of each card and avoiding the ones that offer little to no rewards. Rewards can help you travel during school breaks, or they can help you pay off your statement balance. Very responsible cardholders that pay off their statement balances early can transfer cashback rewards into a savings account.
The following is a list of student credit cards with the best student-centric benefits to offer.
Journey® Student Rewards from Capital One®
Capital One’s Journey® Student Rewards card is a relatively simple card for students with minimal credit. Once approved, students can enjoy 1% cashback on all purchases. What’s more, students can earn an additional .25% cashback of the statement balance if paid on-time each month. It is a great way to get into the habit of making on-time payments, as payment history holds tremendous weight for your overall credit score.
The Journey® Student Rewards card also charges zero foreign transaction fees and is excellent for students studying abroad. There is also no annual fee, which eases the cost of owning the card for the duration of your studies.
- Bonus .25% cash back for paying statement balance on time
- No foreign transaction fees
- No annual fees
Discover it® Student Cash Back
For the goal-oriented student, a card with high cashback rewards is ideal. The Discover it® Student Cash Back card has one of the best cashback incentives for making purchases. Reap the benefits of up to 5% cash back on purchases within various categories, including gas, groceries, restaurants, and Amazon.com.
Discover will also match your rewards earnings dollar-for-dollar after the first year of use, so your rewards will be doubled by the end of the year. Additionally, the Discover it® Student card grants a bonus of $20 statement credit for maintaining a GPA of 3.0 or higher each year. This bonus is granted for up to five years, which is a little longer than the typical length to earn your first degree.
- Up to 5 percent cashback (rotating category)
- Dollar-for-dollar matching on cashback rewards after the first year
- Bonus $20 statement credit for GPA 3.0 or higher for up to 5 years
Deserve Edu Student Credit Card
Deserve Edu is another great card for traveling students. Cardholders receive travel insurance on purchases made with the card, no foreign transaction fees, and no annual fee. The Deserve Edu student credit card is easy to apply for with virtually no credit history requirements. International students with no Social Security number can apply too!
The Deserve Edu Student credit card offers a free year of Amazon Prime Student for cardholders. With Amazon Prime Student, you can order products and supplies for school and have them delivered promptly. Amazon Prime also gives you access to their entertainment streaming services for any downtime between studies.
- Free year of Amazon Prime Student subscription
- Travel insurance
- No credit history requirements
Citi Rewards+ Student Card
Controlling spending and maximizing rewards is a great tool for staying frugal while building credit. The Citi Rewards+ Student card makes this easier by providing features that allow students to earn more while spending less. Not only do cardholders earn 1-2% cash back on purchases, but Citi will also round points earned to the nearest 10. For example, paying $2 for a cup of coffee will earn you 10 points as opposed to the two points you’d get with the typical 1 point per dollar spent model that other cards offer.
Aside from the appealing cashback model, new cardmembers are not required to pay APR for the first seven months. On top of that, new members earn a bonus of 2,500 points after spending $500 in the first three months. That’s $25 that can be redeemed for a variety of specialty gift cards.
- 0% APR for the first seven months
- 2 percent cashback
- 2,500 point sign-up bonus
What makes these cards great is that they offer amazing rewards while reducing the general costs of owning a credit card, such as a high APR and annual fees. These cards require little to no credit and are great for building a credit history for the first time.
With these cards, students have more opportunities to creatively manage money, build credit, and hopefully convert some cashback rewards into savings.