Heading to college is an exciting time in one’s life — you’ve got more freedom than ever before, and you finally get to choose the things you learn about, unlike school before college. The world is at your fingertips, but it doesn’t come without a price.
With such freedom comes responsibility, including the financial sort, but it’s hard to rely on Mom and Dad for everything once you’ve left the nest. A credit card designed for students can be a viable tool to help you pay for books, tuition, transportation, groceries, and any other college-student necessity. Whether you’re ready to begin building a positive credit history or just want a simple, prepaid solution, below are our top credit card recommendations for students.
Best “First Card” for a College Student
Most college students have never had credit before, and that’s okay — everyone has to start somewhere! Even with absolutely no credit history, students can still be approved for a card with a reputable issuer that won’t prey on first-time cardholders.
The Discover it® for Students offers cash back rewards, no annual fee, late payment forgiveness, and no interest on purchases for the duration of the intro period — usually six months — but check the terms when applying as terms change often.
College Students with Limited or No Credit
The nice thing about limited or no credit is that you’re not discriminated against by the credit bureaus for not having an established credit history yet. In fact, you can get card benefits that are comparable to those for people with good credit, with the added bonus of rewards for good grades — typically a GPA of 3.0 or higher.
The Discover it® chrome for Students is very similar to the Discover it® for Students above in that it also offers no annual fee and a 0% intro period, but the chrome offers a higher, fixed cash back percentage, whereas the Discover it for Students offers 5% back on rotating quarterly categories.
The Journey® Student Rewards card is issued through Capital One, one of the 10 largest banking institutions in the U.S., so you know you’re in good hands. The primary benefit to this card is that after five on-time payments, you may qualify for a credit limit increase. As with the Discover cards, you’ll pay no annual fee and earn cash back rewards.
College Students with Bad Credit
Cards for subprime credit typically charge high fees, so a secured card can be a good way to go if you’re a student with bad credit, that is, a score below 650. Secured cards generally don’t have annual fees and provide the opportunity to prove you’re creditworthy as you approach graduation.
The difference between a secured and an unsecured card is that a secured card requires a deposit to “secure” the line of credit. The required deposit is generally equal to the amount of credit you’re given and is the issuer’s way of protecting itself if you miss or default on payments.
This is not to be confused with a prepaid card, as prepaid cards do not report to the credit bureaus, so they do not affect your credit in any way like a secured card will. You may also receive a credit limit higher than the required deposit — this is known as “partially secured” credit and is solely decided by the issuer when you apply.
Prepaid Credit Card Options
If you just need a card to be able to make secure transactions online and the like, but don’t want to worry about interest and annual fees, a prepaid card is one way to go. The most important thing to understand about prepaid cards, however, is that if your goal is to establish credit, prepaid cards cannot help you do this, as they do not report to credit bureaus. If this is important to you, but you’re afraid of overspending, check out the secured cards above.
A prepaid card sets a limit to your spending, as you can only use what you load onto it, and is a good way to keep a budget. Be mindful of fees, though, as some prepaid cards charge small monthly usage fees.
Responsible Usage is the Key to Credit Success
Whichever card you choose, paying your bill on time and keeping your balance low is the key to building a positive credit history. Establishing a credit history before hitting the “real world” is important for finding an apartment or first home, and in some cases, even a job.
If you go the secured card route, keeping a record of on-time payments will allow you to eventually graduate to an unsecured card, just as you’ll be graduating to a brighter, and, hopefully, more financially secure future.
Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.