Student Credit Card Review
Why a Student Credit Card?
For most college students, an important step to take is to start establishing credit. A good way to strengthen your credit is to responsibly use a credit card. Many companies offer cards specifically for college students, and these student credit cards are designed to give those with no prior credit history a chance to begin using and building credit. To apply, you need to be over 18 years of age and currently enrolled in college, although some restrictions may apply based on previous bad credit history. The best credit cards for students provide rewards and services like other credit cards, but they also have some programs to help facilitate and protect your credit from common mistakes made by students. For information beyond what we discuss here, take a look at our articles about student credit cards.
Before Applying for a Student Credit Card
Keep in mind, if you do not have the financial skill or knowledge to responsibly manage a line of credit, do not apply for a student credit card. Before taking on any credit, make sure you can afford it. Use your credit card mainly for your cost of living, i.e. things you would spend money on anyway like food and rent. Never use it to pay for something that is more than you can afford, and do not use your credit card for large, unplanned purchases. If you need more information, seek out financial planning assistance, which can often be found on college campuses.
Owning a credit card is a major financial decision that should never be made lightly. While building credit can help you in the long run, you must ensure you are building a positive credit score or you will do more harm than good to your financial record.
Why Build Credit?
Establishing credit as a young adult is an important step in the transition to adulthood. College is a good time to apply for a first-time credit card because college is a transitional stage of your life – while you make many decisions for the first time as an adult, you still have the familiarity and structure of school.
Your credit score is a numerical representation of your credit history, and your credit history helps banks and lenders see how well you handle credit and manage your finances. If you have no credit history or a poor credit history, lenders will often deny your requests for loans. This can cause trouble down the road when it is time to buy a new car or a house or even just apply to live in an apartment complex.
Some people are surprised to find that credit history is not just examined when making purchases or applying for loans but at other important times like when you apply for a new job. For example, some jobs require you to have a corporate credit card, and if you have no credit history, they may not trust you with company funds. However, if you have a solid credit history, with few missed payments or defaults, lenders are more likely to grant you loans and trust you to responsibly manage the money they give you.
The best way to build credit is to responsibly use a credit card and never extend its limit beyond your means. College is the perfect time to start building credit because as you get older, your options are limited if you do not have a strong credit background.
How Do You Build Credit?
Beginning to build credit can seem like a daunting task, especially if you have no experience with credit cards and applying for credit. Many people wonder how to even begin the process and worry that since they do not currently have credit, no one will approve them.
Student credit cards are a great way to bridge this gap. Since credit cards for college students are designed for first-time credit applicants, the process is geared toward those with no credit history.
Some college student credit cards require a co-signer for approval. This means that someone with an established credit history, usually a parent or guardian, is also on your account. However, this means that his or her credit history is on the hook if you default and cannot make payments.
Can International Students Apply for College Student Credit Cards?
International students attending school in America may face additional challenges when applying for student credit cards. Even if they have a solid credit history in their home countries, it doesn’t carry over when they apply for credit at American banks.
The best credit card for international students is most likely a secured credit card. Like a college student credit card, secured credit cards are easier to qualify for and help you build your credit score. These credit cards require a deposit that covers the bank’s losses if you can’t pay your bills. While putting down a deposit is not ideal, it is a great way to build credit until you qualify for a different type of credit card. Discover it offers student credit cards and secured credit cards that might be good options for international students.
Student Credit Cards: What to Look For
There are many things to consider when looking for the student credit card that is right for you. We recommend that you consider the APR, fees and penalties, rewards, services, and the member support you will receive.
The APR, or Annual Percentage Rate, is very important to understand. This is the percentage amount the credit card company uses to charge interest on your outstanding balances.
There are different types of APRs you should consider. Most of the best student credit cards include an introductory APR for purchases. You want to look at the introductory period time and the overall introductory APR rate. Other APR rates to consider are the standard purchase APR, the balance transfer APR, the penalty APR and the cash advance APR. All of these APRs are variable with a credit card, which means they can shift up and down over the time you are a cardholder.
Fees & Penalties
It is important to find a credit card with low fees and penalties. Some cards charge an annual fee for being a cardholder, but none of the credit cards we included in this guide charge this fee. Other fees you should look at are balance transfer fees, which apply to the total amount you transfer onto the credit card; late and returned payment fees, which are charged per occurrence; cash advance fees, which are charged when you pull cash off your credit limit; and international purchase fees, which apply when you make a foreign currency purchase. Another important thing to consider is the payment grace period offered by the credit card; the best credit cards for students typically have longer grace periods, around 25 days, before you are charged late payment fees.
Some of the better student credit cards we reviewed offer rewards to their cardholders. There are three types of rewards for student credit cards: points, cash back and good grade programs. The type of reward system you choose mostly depends on personal preference.
Cash back rewards programs typically give you a set percentage of the purchases you make on your credit card back in cash. You should see if these rewards are capped, meaning they limit the total amount of cash back you receive, and if the company offers ways of earning bonus cash back. Journey, from Capital One, is one of the student credit card companies to offer a cash back rewards plan. Point rewards build up over time, usually based on a dollar per point basis. You can then redeem the points for gift cards, air miles, merchandise or even cash.
Few services offer the good grade program, and those that do typically offer it in conjunction with one of the programs mentioned above. Programs that offer good grade incentives give you cash back bonuses for good grades, usually a 3.0 GPA or higher. While the good grade rewards are typically more limited than the cash back and points rewards, they are a nice bonus when you have been working hard in your classes.
College student credit cards usually offer benefits at no additional cost to their cardholders. These additional services can include extended warranties for items you buy, auto rental insurance for cars you rent using the credit card and even cell phone replacement insurance. Most of the best student credit cards also include $0 liability protection, which protects you from fraudulent charges made with your credit card.
Whether you are trying to get answers to questions before or after you acquire a student credit card, good member support helps you have a good experience with a credit card company. The best credit cards for students include support that is available 24/7 through phone, email and live chat. You should also seek out companies with good online materials, including a FAQs section on their websites. Wells Fargo has an in-depth financial resource center where you can learn about the importance of managing your credit.
When it comes to finding the right student credit card for you, consider what you want to accomplish using the credit card. These credit cards are best for young adults who have never had a credit card before and need to build a credit history.
When selecting a credit card for college students, carefully examine each service’s rates and fees. Also consider which reward program you will get the most from. Finally, choose a card that offers programs that protect you as a first time credit card holder.