Best Credit Cards for College Students
Last update: Oct 15, 2013
For young people, getting a credit card is no longer as easy as walking up to a booth advertising free t-shirts or some other branded trinket and providing a bit of basic personal information. Now, with the passage of the CARD Act, college students must either find a co-signer or come up with the income/assets necessary to afford a new credit card’s monthly minimum payments – usually around $15.
While nervous parents – with thoughts of free-t-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.
Prioritizing Your Credit Needs
When you have an open credit card that is 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. As a result, students must find a way to meet the new credit card law’s approval stipulations and get to work building up their credit standing.
But what is the best credit card for a college student? There are a wide variety of credit cards for college students on the market and deciding which one to get can be difficult.
The first thing you need to do is limit your search to only no annual fee credit cards, assuming that your credit is not somehow damaged already. A student’s top priority in terms of using a credit card is to build credit, after all, and most college students have limited budgets, so the best student credit cards are 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, while 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 since 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 are also indistinguishable from unsecured credit cards on your credit reports, which means you can build credit and practice responsible habits without running the risk of making your situation too much worse. So, if you have damaged credit, opening a secured card and rebuilding your credit standing is a must.
Editor’s Picks – Best Student Credit Cards
With the above guidelines in mind, and after reviewing our database of over 1,000 credit card offers, we have deemed the following credit cards to be the best for college students:
RewardsThis card provides 1% cash back on all purchases in addition to a 25% cash back bonus each month that you pay your bill on time. 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.
RewardsThis card offers relatively lucrative rewards in expense categories that are popular among students, giving you 3% cash back on gas and 2% on groceries (up to a $1,500 quarterly spending limit in those two categories) as well as 1% cash back on everything else. You’ll also get a $100 initial rewards bonus for spending $500 in the first 90 days and a 10% bonus when redeeming rewards into a Bank of America savings or checking account. There is no annual fee.
Low RatesBank of America does not charge interest on this card for the first 15 months, and there is no annual fee either. It’s therefore a very lucrative financing vehicle, as long as you use a ,a href="http://www.cardhub.com/credit-card-calculator/">credit card calculator to plan your debt payments so that the card’s 10.99% - 20.99% regular APR won’t eat away at your savings. It’s simply a bad habit to get comfortable paying finance charges, especially at a young age.
SecuredIgnore the branding. 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.
SecuredThis secured card does not charge an annual fee during the first year ($29 thereafter) and is therefore well-positioned to meet a college student’s credit building needs and tight budget. Interestingly enough, it also offers a 10,000 mile initial bonus after your first purchase in addition to a base earning rate of 1 mile / $1. Those 10,000 miles are worth nearly enough for a free one-way domestic flight (12,500 required). LifeMiles can be redeemed with any Star Alliance member airline, including United, U.S. Airways, and Air Canada.