It is common to get your first credit card when you go to college. College students have limited access to credit cards. With a traditional credit card, the company runs a credit check to determine your eligibility. This is a problem for college students, who do not have enough of a financial history to build a credit score. Most students either have no credit score, or at best an average credit score. Thankfully, there are many credit cards designed specifically for college students who want to start building their credit score.
College credit cards are different than other credit cards for individuals with low credit score. Many credit cards start with a low limit, but gradually build up to a higher limit. This gives you a chance to adjust to using a credit card responsibly. Student credit cards do not have as many benefits as traditional credit cards, and you are still required to pay interest or annual fees.
Benefits of Using Student Credit Cards
In the past, parents were discouraged from letting their children get credit cards in college. The concern was students would irresponsibly use their credit cards and end up in debt. Student credit cards have built-in limits to prevent this. The biggest reason you want a credit card while you are in college is it lets you build up your credit history. If you wait until after you graduate, it becomes much harder to get financial assistance after graduating. For example, if you want to rent an apartment, it is common for your landlord to run a credit check. Taking out a loan to buy a new car also requires a credit check. While there are alternatives, it makes much more sense to start developing your credit score early.
Some of the best student credit cards also offer additional benefits if you do well in school. Typically, this requires you to maintain a set GPA or get a number of credits. The majority of student credit cards also give you a detailed credit check at the end of the year. This lets you see exactly what causes your credit score to increase or decrease and teaches you how to build a positive credit score.
Using a Student Credit Card
While there are many benefits to using a student credit card, you must carefully use your card to access these benefits. If you want to build your credit score, you must be on time with your card payments. A good rule for students to follow is never charging more than you can pay at the end of the month. This keeps you from making too many charges and missing payments, which leads to owing even more because of late fees and interest.
Whenever possible, consider making more than the minimum payment. This not only gives you more peace of mind because you know all your funds are available, but it can help you build your credit score. It also teaches you the basics of budgeting, and creates good habits for later in life, when you are making payments on larger loans.
Credit Card Rewards
There are many student credit cards that offer sign-up bonuses. While it may be tempting to open multiple accounts to receive more bonuses, this hurts your credit score. Having too many accounts gives creditors the impression you are constantly spending money and using new credit cards to pay off old ones. You are also more tempted to use your credit card if you have multiple accounts, since you can charge separate payments to each one, giving the impression you are not spending as much. Credit cards often have additional rewards that only apply if you continually use the same card, so you may end up losing out on benefits by trying to maximize on sign-up rewards.
Capital One SavorOne Student Cash Rewards
SavorOne is an excellent student credit card if you want to build up your credit. It is a fairly basic card, with no initial sign-up rewards. It also has slightly higher interest rates than other credit cards. What sets it apart from other credit cards is the credit increases. After six months, you are automatically considered for an increase in credit, no matter how often you use the score. Increasing your credit has a positive impact on your credit score.
SavorOne does not have any annual fees, and all students get free fraud liability. The card also has excellent autopayment option. You earn 3 percent cashback when you use the card at restaurants, grocery stores or paying for streaming services. All other purchases earn 1 percent cashback.
Deserve EDU Mastercard
Deserve is popular among students because of the rewards. Deserve does not have as many rewards as other credit cards, but if you spend $500 within your first three billing cycles, you are rewarded with a year of Amazon Prime for free. The card also has an excellent referral program, offering $30 per referral. Students also get access to free cell phone protection, up to $600. There are no annual fees, and students are exempt from any foreign transaction fees. Deserve has minimal cashback rewards, with each purchase earning only 1 percent.
Discover Student Cash Back
Discover is considered one of the best student credit cards because it has multiple rewards and almost no eligibility requirements. All students can sign up for a Discover card, even if they do not have any previous credit history. Your interest rates are slightly better if you have an established history. While the rewards are generous, they are more complex than other credit cards.
Each quarter, there are select purchases where you earn 5 percent cashback, such as using your card at gas stations or grocery stores. All other purchases earn 1 percent back. You can access your account to check what quarterly rewards are available.
All students get a first-year cashback match. While some other companies offer this benefit, they typically require you to spend a certain amount. If you maintain a 3.0 GPA, you earn $20 at the end of the school year, for your first five years. Discover also waives the first late fee penalty for students. Finally, Discover has excellent security features for students. The company periodically scans for strange registrations made with your Social Security number. If there is any suspicious activity, your account is temporarily frozen and the company notifies you of the purchase.