What is the Best Credit Card for Students
Students have an incredible opportunity of building a remarkable credit record. This is because most people normally get their very first credit cards as students and hence they have a very thin or nonexistent credit history. A short credit history will not get you the best credit cards in the market but it is a lot better compared to bad credit. It is also for this reason that we normally urge all students to control their expectation when applying for credit cards.
In fact, to students, credit cards are more about building credit history and scores than they are about solving financial problems. Sure, the card can help you in your day-to-day purchases but the credit line in these cards tend to be limiting. The best part is that if you can get a great credit card, you should be able to build your credit history and lay the perfect foundation for some of the best credit cards in the market once you are done with school.
Before we give you our top three picks of the best credit card for students, it’s only fair that we tell you how and why these cards made it to the list:
Choosing the Best Credit Card for Students
Students operate on a limited budget. Applying for a card with zero annual fees is hence the best path to take. This makes owning the card affordable to almost everyone. Take note that if there aren’t any annual fees charged, it’s also easy to keep the credit card open even after applying for better cards. This will prolong your credit history thus boosting your score.
b. Credit Bureaus – Your credit score will only improve if you are using a card from a company that reports to the three credit bureaus. Ensure that the company of the card you are applying for submits their reports to these bureaus. You can also apply for your credit report at least once every year to check your progress.
Not many credit cards intended for students to offer rewards. A few companies still offer limited rewards and bonuses which might not be too much but they are still better than nothing. If you can get such a card and make your monthly payments on time, you should enjoy some of these bonuses and other incentives.
As we pointed out, credit cards for students are supposed to help with building credit scores. Once this happens, you should upgrade to a much better credit card with a higher credit line and more incentives. Therefore, the ideal credit card for students should have a hassle-free upgrade option that you can use once you are ready.
Top 3 Credit Cards for Students
1. Journey Student Rewards from Capital One
The Journey Student Rewards from Capital One is the perfect card for teaching students how to use a credit card responsibly and making all the monthly payments on time. This is because the company increases the percentage of the cash back you get on your purchases if you make your payments on time. This can increase from 1% to 1.25% and if you make the on-time payments for five consecutive months, they might increase your credit line.
This credit card from Capital One also comes with a program known as CreditWise which ensures that your credit remains on track.
The Journey Student Rewards from Capital One is an ideal card for all students because it introduces them to the credit world with ease while also teaching them how to make their payments on time.
2. Discover it Student Cash Back
The Discover it Student Cash Back is perhaps the most forgiving credit card in the market. With this card, the issuer is willing to turn a blind eye the first time you delay a payment and hence won’t charge you any late payment fee and neither will they highlight it on your record. This offers you a rare second chance to get your affairs in order and get on top of all your payments.
The card is also a favorite to a lot of people due to the incentives it offers. Discover it Student Cash Back offers 5% cash back each quarter on selected categories such as Amazon, restaurants, grocery stores, and gas station. You will also earn an unlimited 1% cash back on any other purchases. If you keep your GPA above 3.0, the company will also give you a $20 statement credit during that school year!
Discover it Student Cash Back also doesn’t charge any annual fees. One problem with this card is that getting approved is not very easy.
3. Discover it Student Chrome
The Discover it Student Chrome is ideal for students who need regular gas fill-ups and eat outs with friends. For these purchases, the issuer provides 2% cash back on combined purchases of up to $1000 on a quarterly basis. All other purchases earn you a 1% cash back. Discover will also double up all the cash back you earn in your first year.
The Student Chrome card also comes with a $20 statement credit for every school year that you keep your GPA above 3.0. This offer runs for five years. You will also get a free FICO Credit Score every month. Use these scores to monitor your progress and see how you can improve.
Discover it Student Chrome is an excellent card especially for students who drive and dine a lot with their friends. If you live on campus and don’t drive too much, you won’t fully enjoy the incentives of this card and hence you are better off checking out the other two cards.
How students can avoid credit card troubles
Owning a credit card as a student can either go very well for you or it can completely mess your credit history if you are not careful. From our experience, the following three factors are the leading causes of bad credit record among students:
- Spending while targeting rewards
Some credit cards for students come with cash back incentives which can motivate you into overspending just so you can earn more of these rewards. Take note that the cash back and overall rewards rate is usually very low and hence if your target is to get these rewards; you will end up spending a lot on unnecessary stuff. In the end, the cash back and other incentives you get are never going to be worth it.
The excitement of owning a credit card for the first time may tempt you into swiping the card almost everywhere you go. As a student, you may also want to brag and make other unnecessary purchases simply because you finally have a credit card. All these purchases will pile up into a huge bill that you might not be able to settle. Soon afterward, your credit score will drop drastically. To avoid all this, make sure that you keep track of all the purchases you make. Avoid buying anything you don’t need or you cannot afford. This saves you from lots of penalties and will also keep your credit record clean.
- Making Minimum Payments
This is yet another common habit shared by a lot of students and first-time credit owners. Just because there is a minimum payment option doesn’t mean that you should always utilize it. This option is best used when you are in serious financial problems otherwise, it’s advisable that you clear the full amount owed. Remember that the minimum payment is just a fraction of the total payment. The rest of the money owed will be carried forward and it will also accrue some interest. Over time, the balances and the accumulated interests may become too much or for you to clear.
Having a clean slate is an opportunity to create the best possible credit record. The above credit cards should help you with just that. These cards don’t have any annual fees and there is also no foreign transaction fee and hence if you were to go study abroad, you won’t be charged for using the card. Get your ideal credit card, stay disciplined with the purchases and make all the necessary payments on time and nothing will stand between you and the best credit cards the market has to offer.