Managing personal expenses during college days becomes difficult for many students. Since students have the least exposure to personal finance management, they often end up making bad financial decisions that add up to their troubles. This is where a student credit card comes as an effective foundational tool. Student credit cards offer students a unique opportunity to develop their credit history gradually, which in the long run can help them achieve financial independence.
Here in this blog post, we are going to explore the landscape of student credit cards in the USA, including the value propositions of each card, key features, and key considerations to choose one.
Why Students Need Credit Cards?
For most students, a credit card offers them the opportunity to avail their first credit. It can help them to develop their credit history over a period of time, but more than anything else, it offers them financial safety in case of contingencies. When unexpected expenses show up, and they find themselves clueless about dealing with them, a credit card comes to the rescue.
The reward programs offered by most credit cards ensure several tangible benefits, such as cashback or reward points that can be redeemed through future transactions. These additional benefits add more value over and above the availability of emergency funds and the development of a credit score for availing future loans.
Key Considerations for Choosing a Student Credit Card
What is the best student credit card? Well, it depends on several factors, and what works for one student may not be suitable for another. Here are some key features that you need to consider to choose the one that works for you.
No Annual Fee
Zero annual fee student credit cards are popular because students hate to pay a yearly fee just for using a credit card. There are plenty of student credit cards that come with several competitive benefits while charging zero annual fee.
Rewards Programs
Attractive rewards programs make some cards more lucrative than others. Some of these rewards include cashback on everyday transactions, reward points against transactions or travel bookings, or discounts at specific outlets. Consider whether the transactions that you frequently make are covered under the respective reward programs.
Interest Rates (APR)
The APR, or the annual percentage rate, which is calculated on the outstanding amount, is another crucial consideration. Though to avoid paying interest, you should clear the total due within the month, students, due to the lack of experience, often fail to clear the dues in time. This is why it is important to look for credit cards with low interest rates.
Credit Limit
The credit limit, or the optimum limit of money that the cardholder student can withdraw or transact against, is another crucial consideration. Though most students prefer cards with a higher limit, a lower credit limit also has its pros, such as avoiding overspending and preventing the risk of a debt burden.
Fees and Penalties
Apart from the annual fees, there are also several fees and penalties that you need to be aware of. Some of these include late payment fees, foreign transaction fees, and balance transfer fees. You should opt for a card that waives off fees or charges a nominal fee for the kind of transactions that you make.
Top Student Credit Cards in the USA
In the USA, we have plenty of student credit cards that are designed with features, fee structures, and rewards that specifically cater to student needs. Here we are going to explore a few of them.
Discover it® Student Cash Back
If you are looking for a card to earn sumptuous rewards against your transactions, the Discover it® Student Cash Back card is ideal. You get 5% cash back for all everyday purchases at different outlets at the end of each quarter. You get 1% cashback for other purchases as well. This card also matches all the cashback you have earned as a new user at the end of the first year, and this is almost like doubling the rewards. No wonder the card is tremendously popular among students who look for rewards and earnings against their transactions. Last but not least, the card has no annual fee and provides a free FICO credit score for students.
Capital One SavorOne Student Cash Rewards Credit Card
As a student, if you dine out a lot, this credit card can save a hefty amount on your bills. The Capital One SavorOne Student Cash Rewards Credit Card offers unlimited 3% cash back for students on their restaurant bills, and transactions across entertainment platforms, movie tickets, popular streaming services, and also on grocery bills. Apart from this, you get 1% cash back for other transactions as well. There is no annual fee for this student credit card.
Bank of America® Customized Cash Rewards for Students
The Bank of America® Customized Cash Rewards for Students is another great option for earning rewards against transactions. You can choose a 3% cash back for any of the student-specific purchase categories, such as gas bills and online shopping. For grocery bills and wholesale purchases, you also get a 2% cash back. Apart from these two categories, other purchases earn you a 1% cashback. Unlike other cards, this one allows you to customize the reward programs based on your spending habits.
Chase Freedom® Student credit card
The Chase Freedom® Student credit card offers a flat 1% cashback on all purchases. The best thing about this card is that after making on-time payments consecutively for several times, it offers the respective cardholder a standing bonus. The card does not require any annual fee, and the cardholders, after completing their graduation, can opt for other cards offered by the bank.
Capital One Quicksilver Student Cash Rewards Credit Card
Many students prefer simple and straightforward reward programs instead of complicated slabs and tiers, and for them, the Capital One Quicksilver Student Cash Rewards Credit Card is an ideal choice. You get guaranteed 1.5% cashback on every purchase, without any conditions or limits. This card also has a zero annual fee.
Discover it® Student Chrome
As a student, if your gas station and restaurant bills are higher than other transactions, the Discover it® Student Chrome card is a perfect choice. You get a 2% cashback on your gas station and restaurant bills with a quarterly cap on the total bill amount. There is also 1% cashback for all other purchases. This card also allows you to double the benefit as a new cardholder, as it matches your cashback earnings at the end of the first year. On top of all these benefits, the card has no annual fee and ensures a free FICO credit score for every cardholder student.
Bank of America® Travel Rewards Credit Card for Students
The Bank of America® Travel Rewards Credit Card for Students is suitable for students who are likely to go on foreign trips or study abroad. While the students earn an unlimited 1.5 points for every dollar they spend on any purchase, they don’t need to pay any foreign transaction fee while studying or traveling abroad. The cardholder students can also redeem points on all travel ticket bookings, cashback, or gift cards. The card comes with no annual fee.
Capital One Platinum Student Cash Rewards Credit Card
If, as a student, building a solid credit score is your focus, the Capital One Platinum Student Cash Rewards Credit Card is the perfect match for you. Though it does not offer any lucrative reward program, it helps you build a good credit history with a clear path. You can see your credit line is taking an upward turn with the on-time payments you make.
Petal® 2
The Petal® 2 Credit Card, besides offering lucrative cashbacks and reward points, allows students with no credit history to build their credit score. The card uses a Cash Score that depends more on the overall banking history than the general credit score, followed by most other student credit cards. The cardholders get an 1% to 1.5% cashback on a list of purchases and do not need to pay any annual fee.
Deserve® EDU Mastercard for Students
The Deserve® EDU Mastercard for Students, unlike most other cards listed here, is designed keeping the needs of international students in mind. An international student without a Social Security Number (SSN) can avail this card. Student applicants are evaluated on the basis of other available data instead of the data associated with a Social Security number. The cardholder students, apart from getting 1% cashback on all purchases, get a complimentary student subscription to Amazon Prime for one year. This international student credit card comes with no annual fee.
Fizz Debit Card
Though the Fizz Debit Card is technically a debit card, it can be used by students to build their credit score without getting burdened by debt. The card connects a student's bank account, as is the case with regular debit cards, but it uniquely pays off purchases daily to prevent the accumulation of interest. Fizz Debit Card sends reports of these repayments to credit bureaus, resulting in the development of a solid credit history for the student cardholder.
Step Visa Card
The Step Visa Card, functioning like a debit card while allowing teens and young students to build up a habit of managing and repaying credit, is a unique option. The cardholders can only spend the deposited amount in their Step account. Here too, transactions and repayments are reported to the credit bureaus to help the cardholder students build their credit scores.
Ending Note
To choose the right student credit card in the USA, based on your purchase patterns, credit score development goals, and constraints, you have plenty of options. While zero annual fee has become a no-brainer, you should look for reward points and interest rates that suit your purchases and transactions. Even if you seldom purchase anything online or rarely dine out, you still can opt for cards that help you to build a credit score that can be handy for availing loans in the future.
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