While nervous parents — with thoughts of free- shirt-wielding, wild-spending teens swirling through their heads — might consider the stricter rules to be a positive development (and they are in certain respects), young people must still find a way to begin building credit before they enter the “real world.” Opening a credit card for college students remains the most efficient way to do so.
When you have an open credit card in good standing, positive information gets relayed to your three major credit reports (Experian, TransUnion and Exquifax) each month, enabling a track record of responsible use to emerge over time. Without this track record and the accompanying solid credit score, creditors as well as certain employers, landlords and insurance companies won’t have reason to trust applicants, let alone offer them attractive rates or jobs that require a security clearance or the ability to handle money.
With that in mind, we’ll give you a full breakdown of the best student credit cards currently on the market, as selected by CardHub’s editors out of more than 1,000 total offers based on their lack of fees, generous rates and rewards, and attainability for young people.
Note: Some offers may originate from advertising partners. Selections were made irrespective of advertiser status.
Editor’s Picks – Best Student Credit Cards
This card provides 1% cash back on all purchases in addition to a 25% cash back bonus when you pay your bill on time each month. The net 1.25% cash back that you therefore stand to earn on every dollar you spend is actually more than what’s offered by the average cash back credit card for people with excellent credit, according to CardHub’s latest Credit Card Landscape Report. It does not charge an annual fee.
This card offers relatively lucrative rewards in expense categories that are popular among students, giving you 3% cash back on gas and 2% on groceries (for the first $1,500 of combined net purchases in both categories quarterly) as well as 1% cash back on everything else. You’ll also get an online-exclusive $100 initial rewards bonus for spending $500 in the first 90 days and a 10% bonus when redeeming rewards as a direct deposit to a Bank of America savings or checking account. There is no annual fee.
This card is great for students who plan to eat out frequently and spend a lot on entertainment, offering 2 points per $1 spent at restaurants and on things like movies, music, video games and more. You’ll also get a $25 initial bonus for spending at least $500 in the first 90 days your account is open, and there is no annual fee.
This card’s primary draw for students with wanderlust is its 10,000-point initial bonus for spending at least $500 in the first 90 days after account opening, which is redeemable for a $100 travel-related expense. But its ongoing rewards aren’t too shabby either, offering 1.5 points per $1 spent across all purchases. It also doesn’t charge an annual fee.
Your means as a student are likely limited, so if you’re averse to the idea of placing a high security deposit, this secured card may be right for you. Certain applicants may only be required to place a security deposit as low as $49 in order to get a $200 credit line. Although you may have a lower deposit than a fully secured card, the drawback is that you won’t earn rewards.
Ignore the brand. This is one of the only secured cards on the market that does not charge an annual fee and therefore warrants consideration if you’re seeking a guaranteed-approval, credit-building tool. The minimum deposit is just $300. In addition, this card comes with a rewards program providing a $10 Harley-Davidson gift certificate upon account opening as well as 1 point for every dollar you spend thereafter, redeem for Harley-Davidson gift cards.
For students who plan to charge more than $270 per month, this secured card will more than pay for its $32 annual fee — it’ll even earn you extra cash. You’ll do so by earning 1% cash back on all qualifying purchases, all the time. It also offers 2% cash back on gas, grocery and drug-store purchases on the first $6,000 spent annually.
Prioritizing Your Needs
Given the importance of credit building and how well credit cards lend themselves to the task, students must tread carefully in choosing plastic to add to their wallets. While CardHub’s editors have done the work to highlight the best student credit cards on the market, there are still some rules of thumb that can aid in the process.
The first thing to remember is that students should always limit their search to cards that do not charge an annual fee, assuming their credit is not somehow damaged already. A student’s top priority for using a credit card is to build credit, after all, and most college students have limited budgets. The best student credit cards are therefore those that are essentially free to maintain.
Other characteristics are secondary and depend on a student’s individual needs. Students who will pay their bills in full every month should focus on rewards, whereas those who will need a bit more time to pay off large purchases should gravitate toward 0% APR student credit cards. The subset of the student population that already has credit card debt should look to minimize its cost with a student balance transfer credit card.
Finally, it’s important to note the role that secured credit cards can play. Secured cards are the easiest type of credit card to get approved for. The reason is this: They require a refundable security deposit that serves as the account’s spending limit and reduces risk from both the student’s and issuer’s perspective. They also are indistinguishable from unsecured credit cards on your credit reports, which means you can build credit and practice responsible habits without running the risk of exacerbating your situation. So, if you have damaged credit, opening a secured card and rebuilding your credit standing is a must
6 Money-Saving Tips for College Students
Identifying the best credit cards for your needs is only half the battle if you’re a college student. You also must determine how best to use your card as well as garner the skills and experience needed to enter the real world on the right financial foot. Here are some tips for doing so:
- Build Credit: The difference between good, bad and even limited credit is thousands of dollars and a lot of stress. And because the length of time you’ve been using credit is a critical component of your credit score, it’s definitely worth getting a head start on building a track record of responsible financial management before you graduate. Not only may doing so help you land your dream job or lease a new car, but it also will save you money on major expenses such as a mortgage or an annual insurance premium.
- Don’t Make Purchases if You Don’t Trust Yourself: Credit cards report to the major credit bureaus every month whether or not you make purchases with them. Although the credit-building benefits are more pronounced when you actually use your card, overspending and missing payments is counterproductive. So, if you don’t trust yourself to spend responsibly with plastic, give your card to your parents for safekeeping or even consider cutting it up (after noting down your account number in case you need to call customer service, of course).
- Budget: If you combine credit card use with a well-defined budget while in college, you’ll be well ahead of the curve. Only two in five consumers have a budget, according to the National Foundation for Credit Counseling, and that’s one of the primary reasons that credit card debt levels are as prodigious as they are. So, figure out how much you can afford to spend overall each month and determine how you want to allocate that amount. Next, review your spending patterns and payment habits at the end of each billing cycle and adjust accordingly.
- Leverage Campus Financial Literacy Resources: Most colleges and universities offer some type of financial literacy resources, be they a personal finance class, a money management help center or online educational materials. Take advantage of them, especially if doing so will fulfill a curriculum requirement. Learn as much as you can because this information, unlike some of what you’ll learn in college, will translate directly to everyday life.
- Approach Student Loans with Caution: Taking out a bunch of student loans might not seem like too big of a deal now, considering how long you’ll have to pay them off. But too few students truly consider how big of a burden they can wind up being to their parents after graduation. Student debt increases the pressure to find a job — already a tough task in the current economic climate — and can delay major life events such as buying a home, getting married or starting a family. No one wants to be paying off education debt into their 40s, which is all too common these days. Try to supplement your tuition money with scholarships, grants and work experience, which also give your resume a boost.
- Improve Your Financial Literacy: Understanding how to manage money is an invaluable life skill that you probably won’t learn much about in school. The best thing you can do, therefore, is take matters into your own hands and educate yourself on the most important topics. To get a sense of your current knowledge level and the areas where you can improve the most, get your WalletLiteracy Score.