Credit cards can be a great tool for students to build credit and develop good financial habits, as long as they use them wisely. But with so many options out there, it can be tough for students to figure out which credit card is best for them.
To help you out, here’s a breakdown of some of the best credit cards for students, organized by category.
The most popular and typically best type of credit card for students is the cashback credit card. These cards let students earn a percentage of their spending back in cash rewards, usually between 1% to 3%. There are many options that cater to different spending habits, like gas, groceries, and dining. Some even offer low or 0% introductory APR for the first several months to a year.
One of the easiest ways for students to get approved for a credit card is to apply with a bank they already have an account with. Many banks offer cashback credit cards specifically for students or those without a credit history.
Besides local banks, big brands like Mastercard, Citi, Capital One, and Discover also have great cashback options for students. These cards often come with added perks like no foreign transaction fees or extended warranty protection on purchases.
For students who love to travel, a travel rewards credit card can be a fantastic option. These cards often come with sign-up bonuses in the form of points or miles, which can be used for flights, hotels, and other travel expenses.
When choosing a credit card, college students should consider a few key factors. Note that high school students (under 18) will need more involvement from a co-signer, usually their parents.
One of the main benefits of using credit cards is building a good credit score. Good credit is crucial for future financial needs like renting an apartment, buying a car, or getting loans for big purchases like a home. By starting early, students can establish themselves as reliable borrowers and qualify for better interest rates later on.
Another benefit is learning how to manage money responsibly. With a credit card, students can get a handle on budgeting and making payments on time, which are essential skills for long-term financial success. Some student credit cards even offer features like gamified savings challenges, spending alerts, and budgeting tools to help students keep track of their expenses.
Additionally, student credit cards often come with rewards that fit their lifestyle, like cashback on everyday purchases or travel discounts, helping them save money and get more value from their spending.
However, there are some downsides to consider. One potential drawback is the temptation to overspend and rack up debt. Without proper budgeting and financial discipline, students might find themselves in debt that’s hard to pay off.
Student credit cards also tend to have lower credit limits than traditional ones, which can be a disadvantage for students needing to make larger purchases or have a higher limit for emergencies.
Students should be mindful of the potential impact on their credit scores. Late payments and high credit utilization can hurt a student’s credit score, making it harder to get loans or other financial opportunities in the future.
To avoid debt, it’s crucial to use credit cards responsibly. Here are some tips for responsible credit card use:
– Choose a card with no annual fee, rewards, or benefits. Some top choices include Discover It Student Cashback, Capital One Quicksilver Student Cash Rewards Credit Card, Bank of America Travel Rewards Credit Card for Students, and Capital One SavorOne Student Cash Rewards Credit Card.
– Focus on making timely payments, keeping credit card balances low, and avoiding opening too many credit cards at once.
– Regularly check credit scores and dispute any errors or fraudulent activity.
If a student doesn’t qualify for a student-specific credit card, they might consider getting a secured credit card or becoming an authorized user on their parent’s credit card. A secured credit card requires a cash deposit as collateral and can help build credit. Being an authorized user allows students to benefit from their parents’ good credit history.
Students usually need to be at least 18 years old and enrolled in college. Some credit card companies may also require proof of income or a co-signer if the student has little or no credit history.
By choosing the right credit card and using it responsibly, students can build a solid financial foundation for their future.