www.taxprofessionals.com - TaxProfessionals.com
Posted by Jim McClaflin, EA, NTPI Fellow, CTRC

The Best Credit Card Options for Students

The Best Credit Card Options for Students

Students may want to start their credit journey with a new card. But being eligible for a traditional credit card can be difficult when you have limited income and bad credit history.

This is where student credit cards come in. Many of these cards are designed with students in mind and marketed specifically for students, and can often include features to suit your needs.

Check out our picks for the best student credit cards, all with no annual fee.

Deserve® EDU Mastercard: Perfect for students with no credit history

The Deserve® EDU Mastercard evaluates applicants (usually students) with no credit history and may allow these students to create their credit profiles.

The Deserve® EDU Mastercard does not require a co-signer or security deposit when you apply. International students can also apply, as a social security number is not required to qualify for the credit card. But these applicants will need to provide other documents such as ID and proof of bank account balance.

The Deserve® EDU Mastercard offers many benefits and rewards, including a one-year Amazon Prime Student membership (a value of $69) when you spend $500 in your first three billing cycles and 1% back on all purchases.

Bank of America® Travel Credit Card: Best for Studying Abroad

The Bank of America® Travel Rewards Student Credit Card includes a solid sign-up bonus to cover travel expenses.

Cardholders who spend $1,000 and above on purchases within the first 90 days of account opening can earn 25,000 bonus points, enough for a $250 travel purchase credit. Plus, you'll earn unlimited 1.5 points for every $1 that is spent on purchases.

Plus, if you're studying abroad, you don't have to worry about foreign transaction fees — this card doesn't charge them.

Discover it® Student Cashback: Best in Cashback Bonus Categories

The Discover it® Student Cash Back Card, with a $0 annual fee, offers high-rate cash back in rotating categories for students to take advantage of.

You'll earn 5% cashback up to $1,500 on purchases in categories that rotate quarterly when active (and 1% above that limit). In the past, these categories included common expenses in places like:

  • Amazon.com

  • Gas Stations

  • Grocery Stores

  • Restaurants

If you eat out or shop online daily, you can get value with this card based on renewable quarterly redemption categories.

You'll be required to activate your bonus rewards each quarter to receive the 5% cash back rate on qualifying purchases. All other purchases earn 1% cash back.

Students beginning their credit journey should remember that getting cash back is not a reason to spend more than you can comfortably afford. Building good credit and avoiding high-interest payments will ultimately benefit you more than you earn in rewards.

Capital One® Journey® Student Credit Card: Ideal for developing good credit habits

One of the perfect ways to build credit is to make your payments on time, and this card rewards you for that with increased repayments.

The Capital One® Journey® Student Credit Card earns a base rate of 1% cash back on all qualifying purchases, but you'll earn an additional 0.25% cash back each month you pay your bill on time. In other words, you will be encouraged to maintain good credit habits.

You will also automatically be considered for a larger line of credit within six months, which can help improve your credit utilization rate; as long as your spending habits stay the same, your line of credit should increase.

Remember that not paying on time can hurt you, as the card carries late fees of up to $40. And if you have a balance, you'll be hit by the card's high 26.99% variable purchase rate. It is always a great idea to pay on time with any card to build credit and avoid costly fees, but the terms of this card make this importance even more apparent.

Making the Most of These Student Credit Cards as a Student

While focusing on perks and rewards can make choosing your first credit card exciting, the biggest benefit of opening a student credit card is building credit from scratch. By starting to accumulate credits before graduation, you can put yourself in a position to use them after school.

Here are some helpful tips to help you get the most out of one of these cards and create an effective budget as a student.

Set a budget and stick to it

If you don't keep track of your finances, you won't know if you're racking up more debt than you can handle. So before you do anything else, ensure you have a good idea of how much money is coming in and going out each month.

To create a workable budget, start by listing your monthly income, including income from your jobs and anything your family provides. Then list monthly expenses like groceries, school supplies, gas, and car insurance. To stay motivated, write down a goal. Do you want to save for a purchase, increase your emergency savings or simply avoid getting into debt?

Keep a constant eye on your finances; here are some ways to do it.

  • Deposit checks and cash into your bank account as soon as you receive them.

  • Open all invoices as soon as they arrive (or when you receive the notification) and pay them immediately.

  • Use a tool to track your expenses to be more aware of them. Write them down in a spiral notebook, an Excel spreadsheet, or the Notes app, whichever works for you.

  • Use only one credit card at a time while you learn to build credit.

Following these rules can help you avoid card charges you can't afford.

Only spend what you can afford.

To develop better credit card habits, plan to pay your balance in full and on time monthly. Interest rates on student credit cards are high, and carrying a balance from month to month can cost you more than what you earn in rewards.

Understand the Annual Percentage Rate

The annual percentage rate, or APR, is what it costs to borrow money. This is important because you'll accrue interest when you charge your credit card for a purchase and don't pay your statement balance by the due date. However, if you pay off your statement balance monthly, you won't pay interest on that balance, thanks to a so-called grace period.

Often, credit card companies offer a grace period for new purchases. This period is between the end of your card's billing cycle and the payment due date. With most credit cards, if you have no outstanding cash advances and pay off your statement balance in full, you won't be charged interest on new purchases during the grace period.

But beware: if you only make the minimum monthly payment, you can get into debt. For example, for a balance of $1,000 with an APR of 21%, it will take about 5.5 years to pay off the balance and about $662 in interest.

Make sure you know the following information about your card:

  • Bank statement balance

  • End date of the introductory APR (if applicable)

  • Payment deadline

  • The Purchase APR and Penalty APR

Make your payments on time.

Late payments can hurt your credit score. Create due date reminders or set up automatic payments.

Track your credit

Building and maintaining good credit takes time. So it's a good idea to develop good habits early on, like keeping your credit usage low and checking your reports and scores regularly. You may also find errors, which you can dispute with the agencies.



Jim McClaflin, EA, NTPI Fellow, CTRC
Contact Member