Best Credit Cards for College Students

Chances are, you’ve heard horror stories of students getting themselves into thousands of dollars in debt thanks to credit cards. The good news is there are safeguards to help protect you from falling into this pitfall.

Building a positive credit history and establishing good credit will impact you greatly in the future. Credit cards help determine your eligibility for car loans, renting an apartment/house, purchasing a home, or even gaining employment. One of the key factors that determines what your credit score is time. Having a good standing credit history can make your eligibility to purchase important things in your life easier. To read our “Credit Cards 101” article Click Here.

The Credit Card Act of 2009 (Click Here to read more about the Credit Card Act of 2009) helps lessen the potential a student can get into financial trouble by introducing measures such as requiring applicants to be at least 21 years old, having an adult co-sign, or prove their income is enough to make payments. Furthermore, if you are unable to meet the requirements and/or are not approved for a credit card - you might want to consider obtaining a secured credit card. These credit cards have some sort of collateral behind them - for example, a refundable deposit. This refundable deposit is typically equal to what your credit limit will be. The idea behind a secured credit card is that you will build up and improve your credit enough to eventually move to an unsecured card.

There are many credit cards available to students - each with their own benefits. The card that you’ll benefit the from depends on your needs. We’ve put together a list of some of the most popular credit cards out there - along with the pros and cons to help you make an informed decision on the best card for you.

Discover It® Chrome for Students

Pros:

• Access to your FICO score.
• No late fee/APR increase on your first late payment.
• No foreign transaction fees.
• Up to 2% cash back reward on purchases.
• Cash Back rewards never expire and you can use your rewards for cash in any amount with no restrictions.
• Use your Cash Back rewards instanty at Amazon.com checkout.

Cons:

• Not widely accepted overseas.
• Discover has rotating bonus schedule which allows you to earns greater cash back percentages - since these bonus categories are rotating, if you do not spend a lot in these categories, rewards can be lower than most cards.

Verdict:

The Discover IT Chrome for Students Credit Card is a great option for those who are just starting to build credit. With a 0% introductory APR, high potential rewards and an integration with Amazon.com there are many great features of this card. However, if you are planning on going overseas, using this card might not be best option.

Wells Fargo Cash Back College Visa

Pros:

• Ability to link your card to your checking account for overdraft protection.
• Lower APR (compared to most student credit cards).
• Access to money management resources including online credit education courses.

Cons:

• Rewards have to be redeemed at $25 increments.
• 3% foreign transaction fee.
• Need to be a current Wells Fargo customer to apply.

Verdict:

Coupled with a reliable rewards program, the Wells Fargo Cash Back College Visa is a great card for students that are looking for a card with a low APR and resources that will help better manage money.

BankAmericard Cash Rewards Card for Students

Pros:

• Earn 2% cashback at grocery stores; 3% cashback at gas stations (up to $2,500 in combined spending per quarter); 1% cashback on all other purchases.
• Gain up to a 75% boost in rewards rate if you qualify for Bank of America Preferred Rewards Program.

Cons:

• Must have an account at Bank of America to qualify for the Preferred Rewards Program.
• 3% foreign transaction fee.

Verdict

While the card does offer 0% interest for the first 12 months, after the 12 month period, a relatively high interest rate does kick in. On top of this, if a payment is missed, there is an ARP penalty of 29.99% that applies to the first missed payment. Because of this, it is important to be aware of your balance and make payments on time, or you can rack up large amounts of interest.

Citi ThankYou® Preferred Card for College Students

Pros:

• Unlimited rewards: 2 points per $1 spent on dining and entertainment; 1 point per $1 spent on other purchases.
• Citi Private Pass gives you pre-sales, special offers and discounts, and other preferred access to events such as concerts, outings, etc.

Cons:

• 3% foreign transaction fee.
• ARP penalty of 29.99% for a missed payment for an indefinite amount of time
• No regular FICO credit score updates or credit related educational support.

Verdict:

While the rewards program is very generous, this card might not be the best for a student who is trying to build up their credit as the cost of the card can significantly increase if there is a missed payment. The lack of being able to view your FICO credit score is also a disadvantage as it does not provide students an easy way to keep track of their scores.

NOTE: Not everyone can be approved for the credit cards listed above. Either because they lack the credit or they must obtain a secured credit card, as we mentioned at the beginning. Below are credit cards that are available to you either as secured cards - or cards that require no to little credit.

Journey® Student Rewards from Capital One®

Pros:

• 1% cashback on all purchases.
• No limit to amount of cashback you can gain.
• Rewards do not expire.
• Boost your cashback rewards to 1.25% for the month for paying on time.

Cons:

• No promotional bonus rewards or ARP.

Verdict:

This is a no thrills credit card - that is geared towards students who are just starting to build out their credit. A nice benefit of this card is the ability to pick a monthly due date.

Open Sky℠ Secured Visa® Credit Card

Pros:

• Increase your credit line up to $3,000
• Updates monthly to all three credit bureaus - allowing you to build up/back your credit quickly.

Cons:

• If a payment is missed - there is a late fee of $27
• 3% foreign transaction fee.

Verdict:

If you suffer from bad credit - this is a card that will help get you back on track. With a minimum security deposit of $200 - you can increase your credit line up to $3,000. Watch out for added fees though such as Credit Line increase fees, deposit funds fee and Credit Decrease Fees of $25 each.

primor® Secured Visa Gold Credit Card

Pros:

• Approval is guaranteed as long as monthly income exceeds your month expenses by at least $100.
• Interest is fixed with no penalty rates.
• Reports to all three nationwide credit bureaus.

Cons:

• A max late fee of $25 is applied if a payment is missed

Verdict:

The minimum security deposit is $200. This card has a credit limit of up to $5,000 which can be achieved by adding funds to your security deposit in $50 increments.

Wrap-Up:

Virtually all cards offer great rewards, but paying more interest than you need can quickly outweigh rewards and ultimately hurt your credit. It is very important when you are shopping around for credit cards that you find one that fits your needs and one you feel will not fall into a financial pitfall.

There are many options available for college students. Some geared towards giving you great rewards and promotional offers, others are geared towards helping you rebuild or start a new credit history.

Ultimately, you need to choose a card that is best suited to you. There are many great benefits of having a credit card and it is a good idea to establish positive credit as you transition from being a student. What is very important to keep in mind when shopping for credit cards is that many offer great rewards, but paying more interest than you need can quickly outweigh those rewards and hurt your credit. The same is true for avoiding any late penalty fees. It is very important to keep track of your spending and make sure you don’t fall into pitfalls that will cause you to pay.