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
Discover is known for simple terms and great customer service. The Discover it® for Students card offers 5% cash back bonuses on various categories of spending that change each quarter, up to the quarterly maximum, after you sign up for 5%. All other purchases earn 1% cash back. Students can also earn 5-20% cash back when shopping through Discover's online shopping portal. 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. There are also no foreign transaction fees, so this is a great card to use on any travels abroad. 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
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. Students can also earn 5-20% cash back through Discover's online shopping portal which features over 200 online retailers. Another great perk is getting a FICO score with each monthly statement so students can keep up to date on their credit. There is currently an intro 0% APR on purchases for 6 months, after that it will be 12.99%-21.99% variable. All Discover cards offer zero foreign transaction fees, and there is no annual fee.
Citi® Dividend® Card for College Students
The Citi® Dividend® Card for College Students offers 5% cash back every quarter in rotating categories, and 1% cash back on all other purchases. Students may earn a total of up to $300 per calendar year. Citi also has a shopping portal of over 400 retailers where cardholders can get 5% unlimited cash back. Citi offers a 0% promotional APR on purchases for seven months, followed by a regular APR of 13.99% - 23.99% (variable), depending on the applicant’s credit history. There is no annual fee.
Note: This offer is currently unavailable
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. Unlike the Dividend Platinum Select Visa mentioned above, there is no limit to the number of points you can earn. 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.
JourneySM Student Rewards from Capital One®
The JourneySM 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 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 card issuer.