The 5 Best Credit Cards for College Students
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When I was in college, my mom seemed to call me nearly every week to confirm that I was paying my entire credit card balance in full and on time. It was as if she knew that credit cards and college students do not have a good history together. At the time, banks were employing every tactic possible to get large amounts credit into the hands of young adults. So much so that many felt these banks were acting more like predatory lenders than respectable financial institutions. In response, Congress passed the CARD Act of 2009. This groundbreaking piece of legislation set limits on banks' on-campus marketing efforts and required young adults who applied for credit cards to show some means of paying off loans.
Nevertheless, students continue to obtain and abuse credit cards. They tend to incur debt and struggle to make payments on time. While these are bad practices at any stage of life, starting these habits at a young age sets a terrible precedent for how students will continue to manage their finances after graduation. Therefore it is critical that parents work closely with students to carefully guide them into financial independence. (See also: 40+ College Resources for Parents and Students)
Choosing the Best Student Credit Card
So what should parents and students look for in a credit card? Look for simple terms, no annual fees, and if possible, maybe some cash back rewards. You don't want to get in the habit of paying interest on your credit card balance, but if you have to, it shouldn't be well outside the market rates. Also, opening up a credit card account at the same bank that the student holds their checking account is a great idea. This way, timely payments are just a transfer between accounts rather than a transaction between separate institutions.
Discover it® for Students - Double Cash Back your first year
Discover is known for simple terms and great customer service. The Discover it® for Students card offers 5% cash back in categories that change each quarter up to the quarterly maximum after sign-up, plus 1% cash back on all other purchases. As an exclusive offer for new cardmembers, all the cash back earned is automatically doubled at the end of the first year. Students can also earn 5-20% cash back when shopping through Discover's online shopping portal. In addition, they can also enjoy a 10.99% introductory APR on balance transfers for 6 months. After that, the APR ranges from 12.99%-21.99% variable. Free text alerts remind students when payments are due.
Paying late won't raise the APR, and a free FICO score is included in each monthly statement, online, and in their mobile app so students can monitor their credit. The new Freeze ItSM on/off switch allows students to freeze and unfreeze the activity on their account in seconds via Discover's website or mobile app. There are also no foreign transaction fees, so this is a great card to use on any travels abroad. There is no annual fee.
Upromise World MasterCard®
The Upromise World MasterCard® is a credit card made just for college students and one that can help them save a ton of money, thanks to its many cash back rewards. When making eligible online purchases through Upromise, cardholders can earn 5% or more cash back as well as an additional 5% when you use your Upromise World MasterCard®, for a total of 10% cash back. Not only that, they can also get 2% cash back on eligible in-store department store purchases and movie theater purchases.
Cardholders will also receive 1% cash back on all other purchases made on the card, and there is no limit to the cash back they can earn. As a special offer for new cardmembers, Upromise is offering a 0% introductory APR for 15 months on balance transfers made within 45 days of account opening (then it becomes 13.99%-22.99%), along with $25 cash after the first purchase on the card. There is no annual fee.
Barclaycard® Ring MasterCard®
While not a card targeted specifically for students, the Barclaycard® Ring MasterCard® is a great card for them nevertheless. Not only does it offer a competitive and simple 8% APR, there are no balance transfer fees, and no penalty APR hikes for late payments. This is also the first card to introduce crowdsourcing into its terms. The Ring MasterCard allows user feedback to affect the terms and conditions of the credit card. Cardmembers can discuss issues and vote on new ideas in an official community portal. It also has a Giveback feature which allows cardmembers to receive a percentage of the company's profits. There is no annual fee.
Discover it® Chrome for Students - Double Cash Back your first year
The Chrome is the newest in Discover's line of credit cards. Its Discover it® Chrome for Students card offers a more straightforward 2% cash back on gas and restaurants (up to $1,000 combined purchases each quarter) and 1% cash back on all other purchases. As an exclusive offer for new cardmembers, double all the cash back earned at the end of the first year — automatically. Students can also earn 5-20% cash back through Discover's online shopping portal which features over 200 online retailers. Cashback can be redeemed for any amount at any time, and they never expire. Another great perk is getting a FICO score on statements, online and by mobile app so students can keep up to date on their credit. For new cardmembers, there is currently a 0% introductory APR offer on purchases and a 10.99% introductory APR offer on balance transfers, both of which last for 6 months. After that, a 12.99%-21.99% standard variable APR will apply. This card also comes with the Freeze ItSM on/off switch. All Discover cards offer zero foreign transaction fees, and there is no annual fee.
Citi ThankYou® Preferred Card for College Students
Another card for students offered by Citi, the Citi ThankYou® Preferred Card for College Students offers 2 points on dining and entertainment purchases, and 1 point on all other purchases. There is no limit to the number of points you can earn with this card, and the points won't expire. They currently offer a sign up bonus of 2,500 points after spending $500 in the first three months, and 0% intro APR for 7 months on purchases. After that, the APR ranges from 13.99%-23.99% (variable), based on credit worthiness. There is no annual fee.
Journey® Student Rewards From Capital One®
The Journey® Student Rewards from Capital One® is marketed to students and features 1% cash back on all purchases, every month, with no annual fee. In fact, Capital One offers an additional 25% cash reward on the cash back earned each month when cardholders pay their bills on time, for a total of 1.25% cash back. There's no limit on how much cash back students may earn, and the rewards don't expire. After making the first 5 monthly payments on time, cardholders get access to a higher credit line. There's fraud coverage if the card is lost or stolen. This card also comes with the Capital One Credit Tracker, which gives cardholders free access to their monthly credit score as well as helpful credit tips.
No matter which card they choose, students face treacherous path on their road to financial independence and responsibility. By working together to choose the best card for their needs, parents and students can smooth out this critical path to adulthood.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any bank, card issuer, airline or hotel chain.