A Quick Guide to Student Credit Cards

student credit cardsOh, life as a college student. You’re living the dream, right? You don’t have any financial struggles, and you’ve got plenty of money in your pocket. I’m sure you’re thinking: “that’s definitely a dream, but I’m not living it.” Well the good news is that almost everyone goes through this season of life. College isn’t meant to be a time of abundant living; it’s meant to be a time of personal growth and frugality.

There are several things every child must know about money before leaving home, but we’re not all fortunate enough to learn the important stuff from someone else. We often have to learn the hard way. Fortunately, if you’re just starting college, you still have plenty of time to recover from financial mistakes, and build a solid financial foundation for yourself.

So what about this credit stuff? When you’re in college, you’re likely just starting out your life. You’re still young, and you don’t have much, if any, credit. You’ll want to get a credit card that benefits you now and your credit in the long run.

What are Student Credit Cards?

If you don’t have credit, you should look into a student credit card. Student credit cards are meant for college students who are looking to build their credit from little or nothing.

The rewards and benefits aren’t going to rival The Platinum Card® from American Express or the Chase Sapphire®, but a student credit card may be your only option without having to involve your parents. Try to find a card you can apply for on your own. Your parents may be willing to cosign to get you a better card, but don’t risk that relationship. If you run into financial problems, they will be stuck with the bill.

Student credit cards can be helpful, especially to establish a credit history earlier on. The length of your credit makes up 15% of your FICO score. That’s pretty important. So look into getting a student credit card now rather than later.

Who is Eligible for Student Credit Cards?

Simply put, a student credit card is for any college student who doesn’t have enough, or good enough, credit to apply for a higher quality credit card.

You must actually be a student to apply for a student credit card. You face legal penalties if you falsify this. And it’s not like the cards are so good that you just have to have them. If you’re not a student, don’t apply.

Just because you’re eligible doesn’t mean you should get one. If you want to build your credit, see if you qualify for better cards first. There are plenty of great Visa, MasterCard, Discover and American Express cards that surpass all student credit cards in benefits, fees, and interest rates.

If You Do Get a Student Credit Card

If everything works out and you do get a student credit card, or any other credit card for that matter, do yourself a favor and commit to paying it off monthly. A lot of people don’t realize that you pay zero interest if you pay off your card monthly. Interest is for people with a revolving balance (a balance not paid in full that rolls over to the next month).

Here are some things to look at when evaluating credit cards:

  • Annual Percentage Rate (APR)
  • Intro APR
  • Late Fees
  • Rewards and Benefits
  • Annual Fee

If you pay off your card in full each month, you won’t have to worry about the APR, because you won’t have to pay it. The same applies with late fees. As far as rewards, don’t expect them to be great if your credit is low, but still find the best ones you can. Keep reading. There are some decent rewards on the cards below.

Now let’s talk about those annual fees…

Annual Fees

You may have an annual fee, so keep an eye on this. When you’re dealing with cards that are meant for people with low credit, you’re more likely to have one. Check it out before you apply for the card to make sure it’s reasonable. That said, there are several student cards below without an annual fee.

For example, The Platinum Card® from American Express has an enormous annual fee (over $500), but some people save enough money through all the rewards to make it worth it, and then some. I also know people who have this card, and don’t save enough to make it worth paying the annual fee. An annual fee shouldn’t scare you away, but you need to do some calculations before agreeing to one.

3 Student Credit Card Options

Let’s take a look at some of the leading student credit cards…

Discover IT Student Credit Card1. Discover It® Student Cash Back

  • Credit Needed: Fair
  • Intro APR: 0% (first 6 months)
  • APR:24%-24.24% variable
  • Annual Fee: $0
  • Rewards: Discover will match all of the cash back you earn in your first year. After that, you’ll earn 5% cash back at gas stations, grocery stores, restaurants, and retails stores, but it changes quarterly. You have to activate it to see where you get the 5% cash back for that quarter.

Apply for It.

Discover IT Chrome for Student2. Discover It® Student Chrome

  • Credit Needed: Fair
  • Intro APR: 0% (first 6 months)
  • APR:24%-24.24% variable
  • Annual Fee: $0
  • Rewards: Discover will match all of the cash back you earn in your first year. After that, you’ll earn 2% cash back at gas stations and restaurants, on up to $1,000 in total purchases. You’ll earn 1% on all other purchases. There’s no need to activate any categories for this one, the cash back applies to all purchases.

Apply for it.

Capital One Journey Credit Card3. Capital One® Journey Student Rewards

  • Credit Needed: Fair
  • Intro APR: 0% (first 6 months)
  • APR:99% variable
  • Annual Fee: $0
  • Rewards: Earn 1% cash back on all purchases. Easy enough.

Apply for it.

You can see some more options at WalletHub.

An Alternative to Student Credit Cards

If, for whatever reason, you don’t go with a student credit card, you have another option: secured credit cards. A secured credit card is backed by a secured payment. This payment is used as collateral for the card. It’s a good way to build credit when you don’t have any.

Secured cards give you the ability to use a credit card like you would use a debit card, meaning you already have the funds before making purchases. While student credit cards can be great, they do typically require at least some credit. If you have absolutely no credit, secured credit cards are your best bet.

Practically anyone can get a secured credit card, because you secure the funds before you spend the money. You’re not viewed as a risk to credit companies like you are when you have a high credit limit and no guarantee of being able to make your payments.

Conclusion

Getting a credit card is a serious decision. Whether to use credit cards or not is a decision on its own. Then you have to decide which type of card to get, and finally, which specific card to get.

Do your research and get the right card for you. Once you have one, only apply for another if it makes sense. Once your credit starts to rise, you may be able to get multiple cards that provide different rewards for different types of spending. Ultimately, it’s your decision.

About the Author

Kalen Bruce is the founder of Freedom Sprout where he simplifies financial concepts to help you teach your children about money. If we teach financial literacy to our kids now, we won’t be showing them how to dig their way out of debt later.

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