When you’re a kid, it’s tempting to count down the days until you’re an adult and all the freedoms that come with it. Ice cream for dinner! Going to bed whenever you want!
Of course, as you reach the end of your teen years, you realize that there’s a lot of responsibility that goes with these freedoms. One is choosing a credit card after you turn 21 so you can start building your FICO credit score.
Choosing your first credit card as a college student is a daunting task. First, you hear that most cards offer rewards for using them and that sounds great. At the same time, you also learn complicated-sounding terminology like intro APR versus variable APR.
Read on to find out why we think the Discover Student Card is the best card out there for college students who are getting their first credit card.
Who Can Apply for the Discover Student Card?
Since the card is designed for students, you will need proof of being enrolled in a two-year or four-year college or university to be eligible.
As part of your application, they’ll look at your credit reports and other financial information but don’t worry if this is your first card. It’s designed for people with limited or no credit but they need to make sure you don’t have bad credit.
The Discover Student Card at a Glance
Don’t worry, we’ll explain these in more detail below!
- Annual fee: $0
- Interest rate: 0% on purchases and 10.99% on balance transfers for 6 months
- ongoing variable APR of 14.49% – 23.49%
- Rewards: 5% cash back on specific purchases up to $1,500 per quarter and then 1% on all other spending
- $20 credit for every school year where you score a GPA of 3.0 or better, for up to 5 years
- Sign up bonus: Earn a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year
The Discover Student Card Interest Rates Explained
The most confusing thing about any credit card is understanding the interest rates that you will be charged on any balance you carry forward. This refers to unpaid charges on your card at the end of each billing period.
APR stands for an annual percentage rate and is the interest you will pay over a whole year on your unpaid balances.
For the first six months after you sign up for the Discover Student card, you will be charged 0% on purchases and 10.99% on balance transfers. This is designed to help you get into the practice of paying your bills on time and thereby avoiding interest payments in general. Balance transfers refer to things like getting cash back off your card.
This also means that if you have been thinking about making a big purchase, you should do it soon after signing up for the card. Then you will be able to pay off the balance over six months without paying any interest on the purchase.
Following the first six months, you will be charged an ongoing variable APR of 14.49% – 23.49%. What this means is that your interest rate will change based on your credit habits.
If you always pay your balance, it will remain at 14.49%. However, if you miss payments, your interest rate will increase over time.
The Discover Student Card Rewards
The Discover Student card rewards program is one of the most comprehensive rewards programs we’ve seen in a long time. It is designed with students in mind and there are even partnerships with organizations popular with university and college students.
Firstly, you can earn 5% cash back across four rotating categories throughout the year. In 2018, these categories are gas stations, grocery stores, restaurants, and Amazon or other wholesale clubs. Each category runs for a three month period.
Note, that you need to manually activate the rewards categories in order to benefit from them. The 5% cash back rewards are capped at $1,500 in spending per quarter (or $75 cash back). At the same time, you can earn 1% on all other purchases.
Finally, the signup bonus new card members will be able to take advantage of is Discover’s Cashback Match program. What this means is that during the first year of having the card, Discover will match any cashback you earn.
For example, imagine you reach the cap of $1,500 spent on restaurants during its quarter. You’ll receive $75 cash back at the end of the quarter and then an additional $75 from the Cashback Match program.
In addition to those rewards, the card also offers 5-50% cash back at retailers through the Discover Deals shopping portal. The retailers and quality of the deals vary from getting $6 off your first two Uber rides to $10 off purchases of $30 or more from Kohl’s. These offers are also matched by the Cashback Match program at the end of the year.
What We Love About the Discover Card for Students
Learning about how your FICO score is determined doesn’t need to be a complicated procedure as long as you understand how it’s calculated. With this card, you can check your credit score every month and keep track of its progress.
Building a strong credit score will impact you for your entire life. This score is used to determine everything from your eligibility for apartment rentals to your future interest rates on a mortgage or car loans.
Another benefit is that there is some leniency built into the card to help first-time cardholders. Besides offering 0% interest for the first six months, the card is also forgiving for the first time you miss a payment.
Finally, a great feature for students is the option to “Freeze It”. This is a function that allows cardholders to freeze and unfreeze the card whenever they want to prevent cash advances or purchases. This can help students manage their finances, especially during leaner times.
What We Don’t Love About this Card
If you find yourself in need of quick cash, the Discover Card charges either $10 or 5% on any cash advances.
You need to make sure you have a good system to not forgetting your payments. Although you’ll get one chance as mentioned above, after that you will be charged a late payment fee of $37. Additionally, there’s a returned payment fee of $37.
The rewards categories may not fit your interests. The categories in 2018 are more general but one of them in 2017 was home improvement stores.
Finally, this card is really only suitable in major cities in the USA. When studying or traveling abroad, you’re likely to struggle to find stores that will accept your Discover credit card.
Who Should Apply for the Discover Student Card?
It goes without saying that you should only apply for this card if you can handle the responsibility of credit. Too many students see their credit cards as an extension of their income and end up spending more than they can pay.
Another trait that students should have if they are applying for this card is good organizational skills. We think it’s great that the card offers cashback on rotating categories, but you need to sign up for these programs in advance in order to benefit from them.
Finally, this card is probably better suited to students who live in cities. Small towns with an independent retail culture may find it difficult to find stores that will accept their card.
Other Benefits of the Discover Student Card
With the goal of being a comprehensive card to meet all of the needs of students, there is a collection of other benefits that cardholders can take advantage of.
Withdraw Cash At Store Checkouts
At participating store, you can get cash back from your credit card and best of all these are charged as part of your purchase instead of a cash advance so you can avoid the fees and higher interest rates that are associated with cash advances.
The card allows you to withdraw $120 per 24 hour period through this program. Discover does not charge for this service, although most of the retailers charge a small fee.
Get Cash Back When You Refer a Friend
If your friends are looking for a new credit card and interested in the Discover Student Card, send them your referral link. When they are approved, you will earn a $50 cash back bonus. Your friend will earn the same bonus as long as they make a purchase within three months of opening the account.
Some restrictions apply to the referral program. You are limited to ten referrals per year and your account must be in good standing in order to reive these benefits.
The Discover card offers students a few different protections.
With the Price Protection program, you can get a refund of the difference if you find an item you’ve purchased advertised at a lower price within 90 days of purchase. This is another thing you need to be proactive about.
Discover also has a $0 fraud liability policy to protect you from unauthorized purchases in the event that your card is stolen. Additionally, the card offers an identity theft alert service free of charge. This service is offered through Experian and send you an alert if your Social Security Number has been used to open any new accounts or loans in your name.
Flight Accident Insurance
When you purchase airline tickets on your credit card, you are insured for accidental death or injury while at the airport or on a flight for up to $500,000.
Auto Rental Insurance Damage Waiver
When you rent a vehicle and pay in full with your Discover student card, you receive coverage against collision damage. However, you must decline the rental company’s insurance to receive this coverage.
Discover Has a Dedicated Customer Service Team
With the card, you gain access to a 24/7 customer service phone line which connects you to a living and US-based customer service representative.
Knowing that many students will have more detailed questions than more experienced credit card holders, they have trained their reps to provide honest and helpful advice on how to get the most out of your card and the Discover rewards system.
Their dedication to customer service can be seen in the results of J.D. Power’s annual U.S. Credit Card Satisfaction Survey. The survey found them to have the second best customer service, narrowly losing out to American Express.
Additionally, you can find any information you need to know about the any of Discover’s programs through their website or contact them through their live online chat.
Their Help Center offers comprehensive solutions to everything from managing your account to information about rewards, benefits and security information.
5 Quick Tips to Get the Most from Your Discover Student Card
- Watch the rewards program calendar which changes every three months
- Register to take advantage of the upcoming cashback bonus category
- Take advantage of the Discover Cashback Program
- Use your cash back balance for gift cards to earn more than if you use them as a payment method at checkout
- Avoid Cash Advance fees by using taking out cash when you checkout
Is the Discover Student Card Right For You?
The bottom line is that you have to decide if this card meets your needs and, most importantly, if you’re ready for the responsibilities that come with having a credit card. Missing payments or maxing out your card now will leave you in a financial hole that people struggle with for years.
If you are ready for a credit card, the Discover Student Card offers a generous rewards system, protection plans and the ability to monitor your FICO score as you’re building credit.
If you’re a good student, even better because they’re giving you that $20 bonus for every year (up to five years) that you maintain a 3.0 GPA.
There are many benefits to having a credit card and learning to manage finances from early in adulthood. Read more about why it’s helpful for college students to have a credit card.