Last Updated on June 1, 2021 by Mark P.
Learning how to manage credit responsibly is one of the most valuable skills that you’ll ever obtain. Having a top credit score unlocks many opportunities in life. It’s the key to homeownership, the key, for many, to be able to afford a car, and the key to not paying thousands of unnecessary dollars in interest. Of course, college is the perfect time for most students to learn about credit and show that you can manage it responsibly. Credit card companies tend to have robust, comprehensive student offerings that are more forgiving of sparse or non-existent credit history. With the best credit cards for students, you’ll be well-equipped to earn rewards and build a solid credit history.
Before getting into what student credit cards are the best, let’s explore what student credit cards are, how they’re different from “regular” ones, and why you should get one.
Why Do You Need One of the Best Credit Cards for Students?
Let’s first start with the “why.” Why should every student get one of the best credit cards for students? There are three primary reasons: build your credit history, earn rewards, and have a lifeline.
Building Your Credit History
Most people turn 18 at the same time that they go to college. Age 18 is also the first time when you can have a credit card. Credit card companies know that this is the perfect time for many people to begin building their credit, which is why they offer these credit cards to students. Many students are starting to take on some forms of debt (student loans, car loans, and others) around this time. Additionally, many students are beginning to earn enough income to qualify for some credit line. That makes the beginning of college a perfect time to get one of the best credit cards for students.
There’s also an incentive for you, as a student, to get a credit card as early as possible. The length of your positive credit history accounts for about 15% of your overall score. The longer you’ve had accounts in good standing, the higher your score!
Most scores consider having an average age of accounts opened for seven years to be the highest marker of responsible credit use. In other words, it takes about seven years to achieve an “excellent” score. If you open your first credit card at 18, by the time you graduate college four years later, you’ll be over half that timeframe. Your score will be much higher than someone who is just looking to start building their credit when they graduate.
Ultimately, by getting a credit card in school, you’ll put yourself in a better financial position when it “matters” much more – when you graduate! Your higher score will make it easier to rent apartments, obtain a mortgage, and buy a car.
If you’re like most students, you probably don’t have an excessive amount of leftover money each month. Between books, course fees, rent, transportation, and all the other expenses that come with the college experience, there never seems to be quite enough money left over for fun.
Paying with credit is a fantastic way to earn rewards on money that you would spend anyway. Instead of paying cash or debit for that $5,000 in expenses, you could put it on a cashback card and earn maybe $50-$100 in rewards. Will it make you wealthy? No. But it’s money you would have spent anyway, so why not enjoy a few drinks or get a ticket to your school’s football game as a bonus?
The rewards you get from the best credit cards for students can help you have fun, pay for school, or even make an extra student loan payment. The choice is entirely yours, but having that little extra money certainly won’t hurt you during this time!
The Best Credit Cards for Students Provide a Financial Lifeline
You might excel at budgeting. You might have every expense correctly calculated and know precisely how much money you have at any given point in time. Fiscal responsibility is an incredibly essential skill to learn.
However, plans fall apart. Life happens. Sometimes you get fired, have an unexpected medical bill, need to pay a lawsuit, or you have a speeding ticket. Things can happen that wind up throwing your financial balance out of sorts for a bit.
Ideally, you would have some savings to cushion these blows. Most experts advise having three to six months’ worth of savings to weather these financial storms.
Having that level of savings is challenging for a college student, though.
So, even though paying credit card interest is not ideal, having some available credit can be a lifeline. You can pay off that $2,000 medical bill on your credit card and pay it off over time, instead of letting it go to collections and dinging your credit score. Or, put another way, it’s much less expensive to pay 19% APR on a $2,000 bill than pay an extra 1% in interest on a $500,000 mortgage later because you have a default on your credit report.
The best credit cards for students act as lifelines. You’re certainly not getting the best deal on any purchase you make if you’re paying credit card interest rates regularly. But, in a pinch, having that line of credit can give you a lifeline to avoid more catastrophic fiscal consequences.
What Are Student Credit Cards and How Are They Different?
Student credit cards work the same way that other credit cards work. The same banks issue them – Chase, Discover, and similar financial institutions. Of course, you can use them at all the same retailers as the “non-student” credit cards.
The primary difference is that banks market “student credit cards” to students. It’s a marketing ploy to incentivize people in college to sign up for their cards. However, there are some subtle differences – neither of which anyone swiping your credit card would ever know.
- Credit Limits Are Usually Lower: Because students tend to earn less money working and have less credit history, credit limits on student cards tend to be calibrated lower than with other cards. You might apply for a student card and receive a limit of $1,000 or so to start. With a few months of responsible credit usage, this limit will increase.
- Banks Are More Forgiving of Less History: Students don’t have much (if anything) in the way of credit history. Therefore, student cards are financial products that expect this lack of history and look at other factors to determine whether or not to extend a credit line or not. In this sense, they are more “forgiving” and likely to be approved than other credit cards.
Other than that, most of the best credit cards for students look, feel, and function the same way as their non-student counterparts.
Why Do Banks Offer Student Cards?
You might be wondering what’s in it for the banks. That is, why would banks offer cards with a lower credit line and a more forgiving application to students? How could that be as profitable as offering cards to people later in their careers?
Banks offer these cards to encourage brand loyalty early. Many people who have student cards wind up “trading up” or keeping them well after graduation. Those are often the cards that people will keep around the longest because they’ll affect the credit history the most.
Recall that credit scores look at the average age of accounts. If you’re 30 and have three credit cards, one that you got at 18, the other at 24, and the other at 30, your average age is 6 (12 years + 6 years + 0 years / 3 cards). If you close the oldest card just after you graduate college, your average age would only be three years (6 years + 0 years / 2 cards). Credit bureaus delete accounts from your report seven years after closure or the last reported activity date.
As such, there’s an incentive to continue to use these first accounts even after you’ve graduated. By marketing these cards to students, they’re hoping to gain a happy client for life!
What Are the Signs You’ve Found One of the Best Credit Cards for Students?
As you might imagine, the bank competition for student cards is fierce. Every financial institution wants to be the first plastic that people put in their wallets. As such, students should look at multiple credit cards to find the best deals.
Here are some signs that the credit card you’re looking at is one of the top deals available:
- Student Perks: If a credit card company is going to promote the credit card for students, presumably there should be some perks for being a student! For example, the Discover It card includes some extra perks for a 3.0 or higher GPA. It’s a small incentive, but it’s above and beyond what regular Discover It holders receive!
- Cashback Where It Matters: Receiving gift cards for Morton’s or Brooks Brothers might be fun when you’re a few years into your career, but they’re not very useful when you’re in college. Make sure that the student credit card has rewards that you’ll be able to use! For example, the Discover It Chrome card gives a solid 2% back on gas and restaurants (including fast food). Those two areas are where many students spend quite a bit of money.
- Minimal Credit History: The whole point of a student card is that you should receive one even if you have a minimal credit history. The best credit cards for students take this into account. For example, the Capital One Journey card does not require much credit history to receive approval.
- Regular Credit Line Reviews: Since this is probably one of your first credit cards, you’ll want to have credit line increases as soon as possible. Increased credit lines will give you a lower credit utilization ratio, which will boost your score. Again, the Capital One Journey card promises a review for an expanded line in as little as six months.
If you spot a credit card that has these benefits, you’ve likely found one of the best credit cards for students!
A Word About International Students
Over one million international students are studying within the US. If you’re an international student, you may wonder about your eligibility for the best credit cards for students.
Please note that the following is not legal advice. However, in general, you should be able to obtain a credit card in the US. Banks almost always require a social security number to pull your credit report, which you would likely get if you’ve started CPT or OPT.
Although it’s rare, some financial institutions request that you be a permanent resident or US citizen to apply. If the terms have those conditions, you would not be eligible. However, most credit cards don’t require either of those, which means that your application will be like any other US person applying for credit!
How Do I Get a Student Credit Card?
If you’re a student, having a credit card is almost essential. You’ll build your credit history, earn rewards, and have a lifeline in case you have some emergency expenses. Even if you rarely use it, having a stellar credit history is invaluable when you’re trying to apply for a mortgage or get your dream apartment.
Getting one of these cards is easy. All you need to do is find one of the best credit cards for students. We’ve compiled a list for you below of some of the best ones. Since you’re a student, there isn’t much to do other than grabbing your social security info, your estimated income, and filling out the application online. Most places can give you a decision in a matter of seconds.
If you do receive a rejection, make sure you look at why the bank denied it before you try applying for another card. Multiple credit applications will hurt your score, so be as sparse as possible when applying for credit.
Of course, if you receive an approval notice, congratulations! You’ve just completed your first step towards a long, prosperous financial future. Enjoy those rewards!
Being a student, especially in college, can be a particularly difficult time when it comes to financial stability or planning. Learning how to manage your finances, while slowly, but surely, building a reputable credit score is extremely important. Later, this will allow you to start financing vehicles, homes and various other purchases, making it even more important to make the right initial steps. To that end, we’ve compiled a list of the top 5 credit cards for students, so readers can explore a few different options to see what works best for them!
DiscoverIt is a great option for students looking to make the first step into building credit. With no FICO history required, the DiscoverIt Credit Card is also much more accessible to students. Apart from that, your interests will never increase, even in the case of defaulting, although students should actively work to avoid that situation. Bonuses include free FICO scores, 5% cashback and a small amount of credit for students that successfully maintain a 3.0 GPA or higher throughout the school year. There are also very few additional fees levied by Discover, making it a great option for students. The only real downside is that it isn’t very global, meaning your Discover card won’t work in many foreign countries, so it might not be the best option if you’re considering studying abroad.
The Capital One Journey Student Credit Card is perfect for a college student. With simple, flat rates on cashback, very little credit history required, low FICO score approval rates and scheduled bonuses for timely payments, the Capital One Journey Card gives students returns of up to 1% on every purchase through cashback. Moreover, the Card will give you small credit bonuses for making payments on time, with an additional bonus for the first five timely payments. There are no annual fees or transaction fees either, making freelancing and international transactions much smoother. Apart from that, Capital One also constantly reviews customer credit performance, meaning you’ll be able to build your credit score and increase your credit limit on a consistent basis. That being said, Capital One doesn’t offer the best cashback rates or rewards in the industry and many banks offer better returns, making it a very viable option for students looking at building their credit scores, but not so much for students who are looking to optimize their returns through their credit cards.
Statefarm offers credit cards to students who haven’t had the opportunity to build a credit history. Moreover, they offer great support and customer care, which can be extremely educational, particularly for students making their first venture out into building credit. With a points system in place for rewards, entitling students to 1 point for every $2 spent. These points can then be redeemed for gift cards, merchandise or even donations, making them great for students. That being said, this is more of an entry-level option for students with no past experience in handling credit. With transaction fees and international fees also being levied, the State Farm Student Credit Card offers some benefits, but, ultimately, does not fare well compared to some of its competition.
This card aims at introducing students to the concepts of interest rates and rewards programs. For your first six months, you’ll get 0% financing on new purchases and transfers as well, with up to 3% cashback on all essentials – groceries, gas, medicine and food, with 1% cashback on all other miscellaneous purchases. This card is a great option for students, as it covers all the basic grounds. There are, however, very few features to take advantage off. Moreover, Wells Fargo has developed a reputation for being notoriously difficult to increase credit-limits with, making this an option with some very beneficial temporary returns. With international fees, transaction fees and a difficult stance on raising credit limits, the Wells Fargo CashBack SM College Card has many drawbacks when it comes to quickly building a solid credit history.
The Discover Chrome Card, while similar to the Cashback card, offers much more benefits to students who are forced to constantly commute or live off-campus. With 2% cashback on gas and restaurants, including a whole suite of fast food chains, students who end up commuting can see big returns with the DiscoverIt Chrome Student Credit Card. Moreover, you’ll enjoy 1% cashback on all miscellaneous purchases. With Discover It, you’ll also require very little to get started – FICO scores, credit history and bank balance won’t factor into your application, making it very accessible for students. This card is essentially designed around the necessities of student life, allowing you to optimize your returns on daily expenditures. If you’re considering studying abroad or are living on campus, however, the Discover It Chrome card offers very little in terms of tangible benefits compared to some of the other options available.
So, there you have it – our list of the top 5 credit cards for students today! We did extensive research and tried to consider all aspects of student life to present information that is practically beneficial and benefits the student, while also keeping things objective to highlight the best deals and returns possible. If you’re a student looking to build a solid credit history or just get some returns on your necessary expenditures, these are some great options to consider going forward!