The 5 Best Credit Cards for College Students
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)
Teaching Responsible Credit Card Use
Just as they once taught their children to ride a bicycle, parents can gradually teach their children to use credit cards responsibly. The key is to employ the same strategy of close guidance followed by ever-increasing levels of autonomy. At first, students should hold an additional card from their parents' account. Parents and students should closely monitor its use and agree on what types of charges will be paid for by each person. Each month, students should reimburse their parents for the charges they agreed to pay themselves. It is also a good idea to have a student manage his or her own checking account and gain experience with a debit card, and another important step is to have students get in the habit of paying their own bills from their personal checking accounts.
Once students have demonstrated the ability to manage their finances, pay their bills, and live within their means, is it time to consider having them apply for a credit card as the primary account holder. When approved, students and parents can continue to monitor spending and payments together in order to assure these accounts are being managed properly. If all goes well, the experience of being the primary account holder will be similar to before, except now the parents are reimbursing the students for the charges they wish to cover, and the student is paying the bills.
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 really every 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.
Wells Fargo Cash Back College Card
Wells Fargo offers a dedicated student card that features 1% cash back on all purchases with no annual fee. To receive this card, students need to demonstrate their ability to repay and have an income greater than $3,000 a year. Once accepted, cardholders can choose their own monthly payment date and sign up for free email alerts. Another nice feature offered by this card is the Visa payWave service that allows contact-free payments for charges under $25. The standard APR for this card is equal to the prime rate plus 7.9%–18.74%, depending on the applicant’s credit history.
Discover it® for Students
Discover is known for simple terms and great customer service. Their it for Students card has no annual fee and offers 1% cash back on all purchases. In addition, cardholders can earn 5% cash back bonuses on various categories of spending that change each quarter. Students can also register for email reminders and paperless statements. They offer an introductory rate of 0% for 6 months, and then switches to a 12.99% – 21.99% standard variable APR.
JourneySM Student Rewards from Capital One®
This is another card marketed to students that features 1% cash back on all purchases with no annual fee. In fact, Capital One offers an additional 25% cash reward each month when cardholders pay their bills on time. Like the other products on this list, students can sign up for email and text alerts to help keep track of their accounts. The standard APR is 19.8% Variable. Finally, there are no foreign transaction fees on any Capital One cards, so this is the ideal card for students departing on a spring break trip to Mexico or a semester abroad.
Citi® Dividend® Card for College Students
Citi offers several different cards targeted at students, but their Citi® Dividend® Card for College Students offers reasonable levels of cash back with no annual fee. Students earn 5% bonus cash back each quarter on new must-have categories — like department stores, travel, and more with enrollment. Enrolling each quarter for new categories that earn more cash rewards is free. Students may earn a total of up to $300 per calendar year. Citi offers a 0% promotional APR on purchases for seven months, followed by an APR of 13.99% - 23.99% (Variable), depending on the applicant’s credit history.
Bank of America Student Platinum Plus
Bank of America is another major card issuer that offers a compelling product designed for students. Its Student Platinum Plus card features email account alerts, mobile banking, and banking by text. Students can even customize the appearance of their card and enhance its security by adding a picture of themselves as well as any other photo they want. There is no annual fee for this card, and qualified applicants will receive an interest rate equal to prime plus 10.99%.
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.
Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.