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As the 2016-2017 school year quickly approaches, many college students are already packing their bags to head off to school; a number of them for the first time. This time of year presents a season of transition for many Americans, and for most young adults, part of that transition includes beginning to take the steps towards financial independence.
A key piece of being a financially responsible adult is building your credit, and the perfect way for a college student to start on the right foot is with a student credit card. There are a number of student credit cards on the market, each with different perks and rewards. Here’s a breakdown of the best student credit cards for 2016:
Best Credit Cards for Students
Discover it® for Students: This credit card offers one of the most generous rewards programs on the market for consumers who may have a limited credit history or even no credit at all. Just like the standard Discover it card, the Discover it for Students offers 1% cash back on all purchases as well as 5% cash back in categories that change each quarter like gas, restaurants, Amazon.com and more. And to make the rewards even sweeter, Discover will give you double the cash back you’ve earned at the end of your first year of card membership!
The Discover it for Students also has numerous features that make it the perfect choice for a first time cardholder. For example, as you get accustomed to your new credit card, you won’t have to worry about an over the limit fee and there is no late fee on your first late payment. You will also receive a free FICO credit score each month to help you track your progress as you build credit. Finally, Discover will reward you for your studies by giving $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years. That means you could put up to $100 in your pocket if you study hard and make good grades!
Journey® Student Rewards from Capital One®: For students who want a more consistent cash back program with no rotating categories, the Journey Student Rewards from Capital One is a great choice. This card offers a constant 1% cash back on all purchases with no limits to how much you can earn. Furthermore, this card rewards you for forming good habits; for every month you pay your bill on time, you’ll receive a 25% bonus on your cash back. This brings your cash back rate up to 1.25% which is very good for a first time credit card.
Another great feature is that you can choose the monthly due date that works best for you. This will help you stay organized with paying your bills and make sure you start out on the right foot. Finally, you’ll get free access to the Capital One Credit Tracker service which allows you to receive an updated credit score every month so you can watch your score rise as you use your card responsibly.
Discover it® chrome for Students: This Discover card comes with all of the same fantastic features of the Discover it for Students including a free FICO score, no late fee on your first late payment, a good grades bonus, and double cash back your first year. And just like the Discover it for Students, this card offers a solid introductory rate of 0% APR for the first 6 months on purchases. However, the cash back program on the Discover it Chrome for Students is slightly different.
Instead of offering 5% cash back in rotating categories, this Discover cashback card gives 2% cash back on up to $1,000 in combined purchases at restaurants and gas stations every quarter, and 1% cash back on all your other purchases. Depending on how you spend your money, that difference could make it a slightly less lucrative rewards card than the Discover it for Students.
Citi ThankYou® Preferred Card for College Students: If you’re a college student looking for something other than a cash back rewards card, then the Citi ThankYou Preferred Card for College Students would be the way to go. This card earns Citi ThankYou points, which can be redeemed in a number of ways through their ThankYou.com portal. One thing that makes this card stand out is that if offers 0% APR for 7 months, which is currently the longest introductory period for a student credit card.
In terms of rewards, the Citi ThankYou Preferred earns 2 ThankYou Points per dollar spent on dining and entertainment and 1 ThankYou Point on other purchases. One downside of this card is that you need good credit to apply, so many students who are looking for their first credit card might have trouble getting approved.
The Bottom Line
Since an important factor that impacts your credit score is the age of your credit history, it’s never too early to start building credit. In fact, when many college graduates arrive in the real world, they find themselves wishing they had gotten a credit card years ago. If you're not a student but still looking for your first credit card, check out our guide to credit cards for beginners.
While rewards programs and credit card perks are certainly nice benefits to have with your card, the most important thing for a student opening their first credit card is that you begin to form good habits by paying your bills on time and not charging up a balance that you can’t afford. All of the cards mentioned above will report to the credit bureaus and help you build a solid credit history if you use them responsibly. And to top it off, you also get to earn some rewards along the way.