Most young people are relatively unfamiliar with the world of credit and finance. This inexperience can lead to mistakes, and some financial mistakes can have long-lasting repercussions. However, students who are responsible and educated about credit can successfully begin a good credit history, which is one of the fundamental building blocks of financial success.
While building a credit history from scratch can be a difficult task, college students have some unique opportunities that other young people do not. One such opportunity that can be beneficial in a number of ways is a student credit card.
Basics of Student Credit Cards
Since you must have credit in order to build credit, it can be difficult for a young person who is just starting out. While many will have to begin down the path of credit with less favorable options like secured credit cards or secured loans, college students may be able to qualify for an unsecured student credit card right away.
Even if the student has no credit history at all, banks and other financial institutions are more willing to take risks on college students. Since college graduates generally have higher incomes than non-graduates, these financial institutions are eager to begin a relationship with them early on. This means that student credit cards can have a number of benefits for both the student and the lending institution.
These cards usually have low credit limits, so the lending institution is not putting themselves at too high of a risk. But they may have many additional perks for students like low interest rates, cash back, bonus points, extended credit limits and many more.
So which bank is the best option for student credit card? That answer will depend upon your own individual needs and financial situation, but we compiled a few of the best cards that can provide many advantages for any student.
Discover it® for Students
Perhaps the best overall student credit card is the Discover it card for students. With no annual fee, a decent credit limit and a number of student benefits, this card can be the best option for many college students looking to build credit or just have a great card to use on expenses.
The card pays 5% cash back on different items every three months with categories including gas stations, restaurants and Amazon purchases. Students receive 1% cash back on all other purchases. There is also an additional cash back reward for maintaining a 3.0 or higher GPA. Discover also provides a free FICO score which can be very beneficial in building and keeping up with credit.
Journey® Student Rewards from Capital One®
This is the best card for responsible students who just want a simple way to make purchases and build credit. Although the cash back rewards are limited, there is no annual fee, and students will receive a bonus for paying on time. There is also the possibility of extending the credit limit after a certain period of responsible use and payment.
Citi Thank You® Preferred Card for College Students
Another great card with no annual fee and a low interest rate is the Thank You card from Citi. This card provides even more ways to earn bonuses than the other options, but the rewards system is slightly more complicated. Instead of traditional cash back, students will earn points which can be used for merchandise, travel, gift cards or even student loan payments.
The Right Card for You
All of these student credit cards provide a great way to begin learning about and building credit. While most college students will qualify for one or more of these options, there are additional qualifications which vary according to the institution. If you do not meet these requirements or are not yet comfortable with your own unsecured card, you can look at other options like secured cards or becoming an authorized user on a parent’s credit card.