Student credit cards are often not treated as seriously as all other types of credit cards. But the truth is that this card works similarly to the rest, i.e. holders would enjoy a line of credit, and get rewards (cash back included) whenever they make purchases with the card.
However, the primary function of a student credit card is to build good credit, which is going to be very helpful as one enters into adulthood.
Having a good credit history goes a long way to help you secure your future mortgage or loan.
If you are a student and understand the boundaries of credit spending, I would say that getting a student credit card is a good idea. It is a good alternative to cash, and it can be handy and useful at times, provided that you don’t splurge unnecessarily on it.
It also provides a means for you to establish credit at a fairly young age. So get hold of one and use it diligently and carefully.
There are no two student credit cards that are alike, which makes it harder to choose one. I will try to show you the differences among some of these cards available in the market today.
My Top 5 Student Credit Cards
Let’s face it, there are comparatively less credit card options for students (or anyone who has no credit), in comparison to working adults with impeccable credit records. Having said that, there are still a number of decent options out there.
Here are my top 5 cards:
1. Discover it for Students
The main attractions for Discover it are its excellent customer service and straightforward terms.
Discover it card for student does not demand a yearly fee.
You earn 5% cash back on a few select categories, plus a 1% cash back on all other purchases. This is made up of a basket of predetermined items, which is subject to changes every quarter.
The students also have the options to sign up for paperless statements and e-mail reminders.
At the time of writing, there is an introductory APR of 0% for the next six months. After this, the APR rate reverts to 12.99% to 21.9%.
2. Citi® Dividend® Card for College Students
Citibank has a number of cards targeted especially at college students. But this Citi® Dividend® Card for College Student stands out, largely due to its more decent cash back program and zero annual fee.
For more generous cash back rewards, look out for their new must-have categories — like department stores, travel, and more. Students need to enroll into these categories every quarter to enjoy a 5% cash back reward.
By the way, enrollment is free.
During the promotional period (lasts 7 months) Citi offers a 0% APR on purchases. When it lapses, effective APR is 13.99% – 23.99% (Variable), subject to the prime rate and the applicant’s credit history.
3. Wells Fargo Cash Back College Card
This Wells Fargo Card is targeted towards students. It imposes no yearly fee, and there is a cash back reward of 1% for all purchases on the card.
In order to qualify, students need to show that they are in good position to pay their outstanding balance and produce income proof of more than $3000 in a year.
Upon approval, cardholders will be asked about their preferred monthly payment date, and the agreement to be sent free e-mail alerts.
Visa PayWave service is incorporated into this card, so for purchases below $25, cardholders can choose contact-less payments.
The AP rate is subject to the credit history of the cardholder. In general, the bank adds 7.9% to 18.74% onto the prime rate in order to derive its APR.
4. JourneySM Student Rewards from Capital One
Another credit card for students that has no yearly fee and rewards 1% cash back on purchases.
To encourage cardholders to clear their bills on time, Capital One offers another incentive of 25% cash reward every month.
Consistent with the practice of other top cards, it allows the students the options to sign up for e-mail and text alerts. The APR rate as it stands today is 19.8% variable.
This card does not have a charge on foreign transactions, so if you’re thinking of a holiday abroad or spending one semester outside your institution, this can be ideal.
5. Bank of America Student Platinum Plus
This is yet another major bank that targets students. Its Student Platinum Plus card charges 0 yearly fees and APR is 10.99% plus prime.
Standard features include email account alerts, mobile banking, and banking by text. Cardholders can even bolster the security features by incorporating pictures of themselves in the card.
Choosing the Best Student Credit Card
What are the attributes to look out for in a student credit card?
When choosing a student credit card, there are things you need to consider.
- Go with credit cards that do not burden you with complicated terms.
- Ideally, there should be no annual fees imposed, and if it features some sort of cash back rewards, then it would be a great bonus.
- I would not advise anybody (students or otherwise) to make a habit of leaving his or her credit card balance unsettled, as the exorbitant interest would turn around and hit you hard. But just to mitigate such circumstances, it is wise for you to check out the interest rates for your intended student credit card, so that you don’t get ripped off unnecessarily.
- In addition, it could be a good idea to open that credit card account with the same bank that you hold your checking account. This way, you’ll have both your accounts consolidated in the same bank, and that can greatly facilitate the transfer of funds between accounts.
College life represents a stage in our life when we are filled with both trepidation and anticipation at the same time. The next journey is going to be tricky with added responsibility in the pursuit of financial independence.
A student credit card can bring you peace of mind as you progressively build credit for the next transition.
While the student label in the student credit card seems to suggest the target demographic, there is no reason to restrict to such cards. You may just meet the qualifying criteria of other types of cards just as well.
My last words are: Look around and find the best deals. The solution does not necessarily come in the form of student credit cards.