Student Credit Card Guide

Congratulations, you’ve made it to college and you now have the freedom to run your own life. Your only responsibility is to get good grades (you can do it we’re sure). Oh, and pay for all of the tuition fees, living expenses, food, textbooks, entertainment, clothes and everything else it takes to get by in life.

Why you need a credit card

The reality for many students is that they need a credit card to afford certain things while they don’t have a job and are tight on money. And while student loans can help to cover the cost of tuition and certain college related living expenses, it is not appropriate to use student loans to pay for movie rentals, tanning salon trips or the latest video game you just have to own. But a credit card can be used to bridge the gap while you’re tight on cash, or simply because a credit card is often more convenient and in some cases necessary for certain expenses (such as renting a car or online transactions).

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Furthermore, establishing credit is an important part of becoming an adult. There are many things in life we will simply have to borrow for, such as getting a mortgage for a house, so building good credit is important to gaining better borrowing rates down the road. Having a credit card and using it responsibly, meaning paying off balances as fast and in as full an amount as possible, is actually wise in life. Borrowing wisely and paying off your credit card in a timely manner can help you build credit and establish a good credit score. As a side note, it is wise to check your credit score annually, this can be done for free at annualcreditreport.com, see the FTC website for more information about credit scores and a description of this sites service. Checking before you buy a house or apply for a car loan is especially wise — you don’t want any nasty surprises of lenders receiving a low credit score.

What factors matter for a credit card?

With this all said, the market for credit cards is a plastic jungle with various credit card companies touting various offers. These are key factors to look for:

  • Annual Fees – One thing for certain as a student is that you should get a credit card that has no annual fee and as low a regular APR as possible.
  • Annual Percentage Rate (APR) – APR is the amount of interest per year your credit card company charges on any balance that exists after your “grace period” (usually one month). Obviously the best thing to do is pay your card off each month so you don’t have to pay any interest, but if you have to carry a balance for a little while before you can earn enough money to pay it off, you’d much rather be paying a small amount of interest. Card companies will usually hook you with a 0% APR for the first few months and then the regular APR kicks in after that introductory period. You need to pay attention to the regular APR, it can go above 20% and that’s going to hurt to pay interest on, think of it as throwing your future money away to the credit card company.
  • Grace Period – The time during which you are not charged interest on a card purchase. If you have paid off your card the month before you won’t pay interest on the current months purchases. However, if you did not pay off previous months purchases it is standard to be charged interest immediately on new purchases. Grace periods vary widely, check out our grace period guide for more information.
  • Rewards Programs – Many cards available today have some type of rewards program such as “cash back” on certain purchases you make. For instance, a cash back gas card might offer 5% cash credit on all gas purchases you make. Other popular rewards include airline miles rewards, hotel rewards, retail rewards and so on. You should look for some type of reward no matter what, after all it’s free money to you if you pay off your credit card each month.
  • Warranty Extension and Purchase Protection – Some cards offer services such as warranty extensions and return protection. For instance, if you purchase a laptop that has a 1-year warranty with a credit card offering this service, you will automatically get your warranty extended to a 2-year warranty. The warranty will be honored by the credit card company between the first and second years. Purchase protection means if you buy certain larger ticket items and it is stolen or accidentally damaged the credit card company will cover the cost.
  • Balance Transfers – Some credit cards will allow you to transfer money you owe on one credit card to another credit card. People do this to get a lower APR. It’s wise to do this if you’re getting a terrible APR on an older card. Remember, you shouldn’t have opened a card in the first place if it had sky high APR rates and you should have been paying off the card monthly and not be in a situation where you have to transfer balances around and play games.

Avoid guys on campus with free t-shirts for credit card signup

Notice in the above criteria we said nothing about how you can get a cool t-shirt or random plastic junk for signing up for a credit card. That’s because you should never be roped into signing up for a credit card when approached by some enthusiastic credit card marketer on campus. You won’t have the time to evaluate a credit card in such a situation, so just avoid these on campus sales tactics.

How to get a credit card when you’re a student

The best way to get a credit card is to do your research online (such as here at studentbuyingguide.com!), evaluate which cards are best for you, then apply online where you’re often instantly approved or declined for a card. The trick as a student is the approval process, if you don’t have any past credit history then you’ll be limited to cards that are targeted at students. This usually means cards with high APR values and limited grace periods. The tactic is to just settle for a card that is easy to acquire, and then once you’ve established some credit with such a card (that means using it and paying off the balance consistently) you can apply for a better card that has more benefits and rewards. If you can’t fully pay off a full monthly balance, make sure to at least pay the minimum amount requirement otherwise your credit score will be hurt.

Because some students will need to apply for an introductory style card and others might have some credit and can get a better card.  In this article we will just cover the main student credit cards available, but in an upcoming article we will go over some of the various rewards cards and provide some guidance on which harder to get rewards cards are best.

Student Credit Cards

Student cards in general require little to no credit history but have high APR and limited rewards. If you have no credit history this is the place to start building credit. We’ll list some of our top picks in this category:

1. Capital One Platinum for Students:

  • 0% APR on purchases for first six months, after that variable APR (currently 19.80%)
  • No annual fee or balance transfer fees
  • Features & Rewards: $0 fraud liability if your card gets lost or stolen, extended warranty program, upload a picture to customize your credit card
  • Credit Limit: $300 – $3,000 starting

2. American Express Blue for Students:

  • 8.90% APR on purchases for 6 months then variable APR (currently 12.9%)
  • No annual fee or balance transfer fees
  • 25-day grace period
  • Features & Rewards: Warranty extension, purchase protection, fraud protection,  return protection, travel accident insurance, membership rewards express program

3. Citi Dividend Platinum Select Visa Card or Master Card for College Students:

  • 0% APR for 6 months, then variable (currently 14.99%),
  • No annual fee
  • Features & Rewards: 5% cash back at supermarkets, drugstores, gas stations & utilities for 6 months; 2% thereafter, Earn 1% cash back on all other purchases.

4. Discover Student Card:

  • 0% APR for 6 months, then variable (currently 16.99%)
  • No annual fee
  • 25-day grace period
  • Features & Rewards: 5% cash back on categories that rotate four times a year (i.e., 5% cash back on gas for three months and 5% cash back on clothing during another three months) and up to 1% cash back on all other purchases.

All of the above cards are decent options for a first student card and you should choose whichever fits your needs best.  Visa and Mastercard are generally accepted in more places, so keep that in mind.  On the flip side, American Express is considered stricter with selecting customers and thereby offer lower regular APR rates and in general the consumer protection Amex offers such as warranty extensions, purchase protection and fraud protection will be tops in the industry.  Personally I use an Amex card and love the customer service and extra coverages it provides, but the rewards programs aren’t as great as other companies offering student cards and you should decide which card suits your needs best.

Filed Under: Feature Articles, Money & Finance
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