College is a time in life that brings a lot of “firsts”. It can mean a first time away from, a first roommate, or the first experience managing your own finances. For many students, it will also mean their first credit card.
Much ado is made of the burdens of student loans, but choosing the wrong credit card early in life can be just as damaging. This is a time when many banks and lenders will start courting new customers. And not all credit cards are created equal.
That’s why we have taken the time to find the best credit cards for college students.
Do I Really Need a Credit Card?
With the abundance of predatory lenders out there, it is wise to be wary. Signing up for the wrong credit card can mean high-interest rates, late fees, and damaged credit scores. But if carefully researched and used with discipline, they can be a great tool.
A credit card is how most people first begin building their credit history. A healthy credit history will become important almost immediately after leaving college. Your credit will influence the rates on any future loans, either help or hurt you when you start looking for your own apartment and will help determine insurance premiums.
Furthermore, if you use your cards wisely, you can enjoy low or no interest financing on some of your college expenses.
The Best Credit Cards for College Students
For the purpose of this list, there are a few notable criteria we looked at, and a few types of cards we excluded altogether.
For example, we specifically avoided cards with annual fees. While annual fee cards do have their perks, most students probably won’t be able to take full advantage of their value. The annual fee is also just one more hurdle to getting a card for cash-strapped students.
We also made the decision not to included secured credit cards after comparing them to their unsecured counterparts.
Secured cards are more geared towards customers with poor credit. They tend to have higher rates and fees and require a significant deposit to offset the risk of lending to customers with poor credit.
The deposit alone would be a non-starter for many students. Most just don’t have hundreds of dollars to put down on a deposit just to get a credit card.
There are also fewer choices for secured cards, as many banks and lenders choose not to issue them at all. Those that are available tend to have much leaner reward offerings as well.
Having considered all of our options, here are our picks for the best credit cards for college students.
1. The Discover it(R) Student Chrome Card
The Discover it(R) Student Chrome and Student Cash Back cards are identical in most respects, so we’ll be looking at them back-to-back. Both are excellent starter cards for students who want to max out their cash back benefits.
This card offers 2% cash back up to $1,000 a quarter on gas and restaurant purchases, and 1% on all other purchases. And at the end of the first year, Discover will automatically match your cash-back earnings.
Discover also gives you a $20 statement credit every year you get a GPA of 3.0 or higher. While that credit probably isn’t a game changer, every little bit helps.
You also don’t need great credit to qualify for a Discover it(R) card. This makes the card appealing to students who either have a minimal credit history or who have made some mistakes in the past.
There are a few things to keep in mind, though. For one, Discover isn’t widely accepted abroad. So while there are no foreign transaction fees, it may not be the card to take with you if you are planning to study abroad.
This card also has a 0% introductory annual percentage rate, or APR, but only for the first six months. After that, it becomes a variable 14.49% to 23.49%. Those numbers aren’t terrible, especially for a first-time card holder, but it is something to remember.
2. The Discover it(R) Student Cash Back Card
The Discover it(R) Student Cash Back Card has virtually the same perks, fees, and drawbacks as its Student Chrome counterpart.
The primary difference is how the cards handle rewards. While the Chrome card may make for a better gas card than anything else, the Student Cash Back card gives rewards on purchases in rotating quarterly categories.
The Student Cash Back card offers a higher rewards rate than its Chrome counterpart. Each quarter, users can earn up to 5% cash back on that quarter’s category. Users earn 1% cash back on all other purchases.
The key to taking advantage of this card’s perks is timing your purchases to coincide with the quarterly categories. You’d also have to spend about $500 a month on the quarterly category to max out that 5% benefit.
That $500 figure can be a lot for students. Especially if the quarterly category is something that most students only use sparingly, like gas.
However, it is still a solid card for users who anticipate a lot of expenses across the board. Like its chrome counterpart, it offers 0% APR for the first six months, and users will get a pass on their first late-fee.
These perks make either of Discover’s offerings attractive to new cardholders. They are more forgiving of early mistakes.
3. The Citi ThankYou(R) Preferred Card
The Citi ThankYou(R) Preferred Card is ideal for the student with an active social life. If you see yourself participating in campus Greek life or other active social groups, this may be the card for you.
The Citi ThankYou(R) card runs on a point system instead of offering cash back.
Students will earn two points for every dollar spent on eligible dining and entertainment purchases, and one point for every dollar spent on all other purchases. Students are also eligible for a 2,500 bonus point bonus if they spend $500 on purchases in the first 3 months of opening an account.
Those points are redeemable for gift cards, statement credits, and Live Nation event tickets, among other things. You can get more mileage out of your points by setting up a Citibank(R) checking account and connecting it to the card’s online bill pay system. This will allow you to use your points to pay bills or make student loan payments.
This can be an attractive option. Getting a head start on paying down your student loans will help you build good credit and reduce the overall debt you will face upon graduating.
Cardholders should beware, however, that the initial sign-up bonus is somewhat on the low side. There is also a 3% foreign transaction fee, so it is not the ideal card for travel.
4. The Bank of America(R) Travel Rewards Card
If you do plan on traveling during your college career, the Bank of America(R) Travel Rewards Card is more in your wheelhouse.
The Travel Rewards card allows holders to earn 1.5 points for every dollar spent. Those points are redeemable for travel expense like flights, hotel rooms, or can be used as a gift card.
There are also no foreign transaction fees, so users don’t have to worry about swiping abroad.
The card offers a sign-up bonus is 20,000 points when users spend $1,000 within 90 days of opening. While those 20,000 points are nothing to look down your nose at, the high $1,000 balance needed may be too high for the student on a budget.
When looking at cards with a sign-up bonus, customers should choose one that fits their means. To do otherwise is to risk pressure to overspend too much and too soon.
Of course, that high balance can be mitigated if the cardholder times their application wisely. If you apply for the card just as a semester is about to begin, you can charge expenses like books, meal plans, and fees to the card to rack up a balance quickly. You would have to pay these costs regardless, so you may as well earn points for your trouble.
This card also lacks some standard travel perks like accident insurance and airport lounge access. It is, however, a solid choice for a first travel card. Using it to build credit will only help the user qualify for more attractive cards moving forward.
In order to maximize the number of points earned, Bank of America customer should you can link the card to their checking or savings account. Doing so will boost their rewards rate by 10%, earning 1.65 points for each dollar spent.
5. The Deserve(R) Edu Mastercard
The Deserve(R) Edu Mastercard is a good choice if you don’t have a solid credit history, don’t have a cosigner, or are an international student.
If you have applied for credit before, you may have been hamstrung by the Catch-22 of needing credit in order to qualify for credit. The Deserve(R) Edu card, however, is available to students who have no credit history. It is also available to international students who don’t have a U.S. social security number.
The only condition is that if an applicant isn’t a U.S. resident or citizen, they need to be enrolled in a U.S. college or university, though that shouldn’t be a problem for our purposes.
Cardholders get 1% cash back on all purchases. They also get reimbursed for an Amazon Prime Student subscription, though only to a lifetime total of $49. After that, renewing your subscription is on you.
The biggest drawback is the high APR of 20.24%. At that rate, carrying a balance can cause interest to stack up quickly. The rewards rate is rather low, and aside from the Amazon Prime Student subscription, there is no sign-up bonus.
If you already have a credit score, you should probably consider applying for a card with a more attractive rewards program. If you don’t have a credit score or are an international student, though, this is a perfectly serviceable option.
6. The Journey(R) Student Rewards Card from Capital One(R)
The Journey(R) Student Rewards Card is an excellent choice for students looking to build positive credit.
This card rewards cardholders for developing good credit habits. Holders earn unlimited 1% cash back on all purchases. That number is increased to 1.25% each month you pay your bill on time.
If you make your first five monthly payments on time, Capital One may opt to raise your credit limit. These features incentivize good behaviors that will help you build and maintain healthy credit for the rest of your life.
Improving your credit is all about establishing a reliable track record, and making payments on time is the single most important thing you can do in service of that goal. Even if you end up carrying a balance, making payments on time demonstrates that you can be trusted to manage your debt responsibly.
The main downside to the Student Rewards Card is its high APR of 19.74% – 26.74%. At those above-average rates, you can find yourself accumulating interest fast.
So carrying a balance on this card is not ideal. If you expect to have to do that or know that you will be spending a lot in certain categories like gas or dining out, one of the two Discover it(R) cards might be a better choice for you.
Another thing to bear in mind is that your introductory credit limit is only $300. That number is admittedly low and would make it impractical for financing many school-related expenses.
But it might be a good choice for a first-time cardholder who is just learning about how to manage a credit line, or who has already financed the bulk of their student expenses. And you will see that limit go up if you handle your first few payments on time.
Overall, the Journey(R) Student Rewards Card is probably the best “starter card”. Its low limit prevents new cardholders from getting into too much debt too quickly, and its incentives encourage users to build healthy financial habits.
Chose the Card that Works for You
Ultimately, the best credit cards for college students are the ones that meet the needs of those specific students. Some are simply focused on building good credit for when they graduate, some want to travel, and some need to finance their social lives.
To learn more about financing for college life and beyond, be sure to take advantage of all the resources Bonsai Finance has to offer.