Best Credit Cards for College Students in 2017

Credit cards that help college students build credit and manage expenses

When students head off to college, it’s often their first time managing their own finances — and that includes using a credit card.

The best credit cards for college students offer young adults with limited credit history (or no credit history at all) the chance to master managing their money and build up their credit scores, which they’ll need to rent an apartment, buy a car, or even upgrade to a credit card with better terms.

In 2017, our top pick for students is still the Discover it® for Students.

Apply Now on DiscoverCard.com's secure website

There are a few reasons why I believe this card is great. First, it has good terms: Low rates and no fees are ideal for students new to credit. In addition, Discover is remarkably forgiving of mistakes that are common to new cardholders, including no fees on the first late payment and no APR hike for paying late. And finally, the rewards. All the cards I recommend for students offer some form of rewards, but Discover’s are the most competitive: 5% back on rotating categories, and Discover matches all that cash back at the end of the first year.

That said, the Discover it® for Students isn’t going to be the best for everyone. I’ll make a case for each of my picks for the best student credit cards, and then finish up with a primer on credit card terminology, and discuss the proper use of student credit cards.

The Simple Dollar’s Picks for the Best Credit Cards for College Students

Discover it® for Students

Apply Now on DiscoverCard.com's secure website

Card Highlights
Card Highlights Provided by Discover:
  • Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.
  • Earn 5% cash back in rotating categories each quarter like Amazon.com, restaurants, ground transportation and more, up to the quarterly maximum each time you activate.
  • Good Grades Rewards: $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years.
  • No annual fee. No late fee on first late payment. No APR change for paying late.
  • Get 100% U.S. based customer service & your FICO® Credit Score for free on monthly statements, on mobile and online.
  • Freeze It® on/off switch for your account that prevents new purchases, cash advances & balance transfers in seconds.
  • 0% intro APR on purchases for 6 months, then the standard variable purchase APR of 13.74% - 22.74%.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.

Simple Rates and Fees

The Discover it® for Students has no annual fee, no foreign transaction fees, and no penalty interest rate. On top of that, Discover will automatically waive your first late payment fee. Actually, most credit card issuers will waive an occasional late payment fee upon request, but it’s nice Discover doesn’t even require students to make the request.

Strong Rewards Program

While many student credit cards offer limited, less competitive versions of the rewards programs featured on other cards from the same company, the Discover it® for Students has identical terms as the standard (non-student) Discover it®. Student cardholders earn 5% cash back on up to $1,500 spent each quarter on featured categories, and there’s a new list of eligible types of merchants each quarter. For example, in the first quarter of 2017, eligible bonus categories include Amazon.com, restaurants, ground transportation and more.

On top of that, Discover will match the rewards earned in the first year by new cardholders. At the end of one year of credit card use, you will receive additional cash back rewards equal to all the rewards you’ve already earned, including the purchases that qualified for 5% rewards.

Even better: Discover it® for Students offers the Good Grades Rewards program. Cardholders who are currently enrolled in college, and who have a GPA of 3.0 or higher (or equivalent) during a school year can receive a $20 Cashback Bonus each school year. No, it’s not an overwhelming amount, but it’s a nice little incentive to do well in school and it can be a welcome recognition of your achievement.

Excellent Customer Service

There’s plenty of anecdotal evidence to suggest that Discover has cultivated legions of fans that find its customer service to be superior to other card issuers. But in addition, there’s quantifiable proof of what industry observers like myself have long noticed. For the last three years, Discover has achieved the highest rank in J.D. Power’s annual survey of US credit card satisfaction. Discover even boasts that all calls are answered by US-based customer service representatives.

Access to Important Financial Info

Like many credit cards, this Discover card now offers free access to credit score information. With Discover, you can view your FICO score each month, and it will display a chart that shows you how your score has changed since you became a cardmember.

Also, the Discover it® for Students offers a feature called the Spend Analyzer that allows you to see where your money is going. You can use it to see purchases by category, compare spending patterns, and sort your purchases by details.

Outstanding Cardholder Benefits

Some of the most important features of a credit card are its cardholder benefits. All Discover cards feature a robust portfolio of standard benefits including extended warranty coverage, return protection, damage and theft protection, and even a price protection guarantee. These protections can be crucial to students who might spend a large portion of their disposable income on items like laptops, smartphones, and other electronics.

Discover it® chrome for Students

Apply Now on DiscoverCard.com's secure website

Card Highlights
Card Highlights Provided by Discover:
  • Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.
  • 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases every quarter - no sign-ups needed. 1% cash back on all your other purchases.
  • Good Grades Rewards: $20 cash back each school year your GPA is 3.0 or higher for up to the next 5 years.
  • No annual fee. No late fee on first late payment. No APR change for paying late.
  • Get 100% U.S. based customer service & your FICO® Credit Score for free on monthly statements, on mobile and online.
  • Freeze It® on/off switch for your account that prevents new purchases, cash advances & balance transfers in seconds.
  • 0% intro APR on purchases for 6 months, then the standard variable purchase APR of 13.74% - 22.74%.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.

Discover offers two different student credit cards, and the Discover it® chrome for Students is very similar to our top pick, the Discover it® for Students. The key difference is the structure of its rewards program, and choosing between the two is going to come down to knowing your spending habits.

2% Cash Back on Gas & Restaurants

You earn 2% cash back at restaurants and gas stations on your first $1,000 in combined purchases made each quarter. This can work well for students who spend much of their discretionary income eating out or filling up their gas tank. If you know much of your spending would fall into these categories, it would be nice to receive double the rewards without having to keep track of rotating categories. You earn 1% cash back on all other purchases.

Like the standard Discover it® for Students, you also receive a rewards match of all of the cash back you’ve earned during your first year as a cardholder, and you’re also eligible to participate in the Good Grades Rewards program that offers you $20 cash back each year that you maintain a 3.0 GPA or higher.

All other cardholder benefits and fees are identical to the Discover it® for Students.

 

Journey® Student Rewards from Capital One®

Apply Now on CapitalOne.com's secure website

Card Highlights
  • Earn 1% cash back on all your purchases. Pay on time to boost your cash back to a total of 1.25% for that month
  • There's no limit to the amount of cash back you can earn, and rewards don't expire
  • Get access to a higher credit line after making your first 5 monthly payments on time
  • Pay no annual or foreign transaction fees
  • Fraud coverage if your card is lost or stolen
  • There's no limit to the amount of cash back you can earn, and rewards don't expire
  • Pick the monthly due date that works best for you

The Journey® Student Rewards from Capital One® has less competitive rewards than either of Discover’s student cards, but it still features low rates and fees. Where it really stands out is how it incentivizes using credit responsibly: The flat 1% cash back on all purchases boosts to 1.25% if you pay on-time each month. Even with that bump, the Discover cards will both reap higher rewards overall, but for lots of college students, big rewards shouldn’t be the focus anyway.

Paying on time five months in a row will also unlock access to a higher credit line. Other features include:

Access to Capital One’s CreditWise Program

The CreditWise program not only shows students how their credit has grown, but also includes a simulator to predict how their credit score can change in response to future decisions, such as paying down debt or opening a new account. (It’s a very cool tool available to anyone, even people who don’t use a Capital One credit card.)

Low Rates and Only a Few Fees

There is no annual fee for this card, and like all Capital One cards, there’s never any foreign transaction fees imposed on charges processed outside of the United States. Also, there’s no penalty interest rate. However, there is a late payment fee up to $35.

Cardholder Benefits

Capital One is a leading credit card issuer and student cardholders enjoy the same benefits that other cardholders receive. This includes extended warranty coverage on your purchases that can add an additional year to your manufacturer’s warranty. Capital One cards are also compatible with the Apple Pay mobile payment program, which allows you to use your iPhone to make payments at participating merchants. Finally, you can enjoy 24-hour travel assistance that can help you get a card replacement or a cash advance in an emergency.

Citi ThankYou® Preferred Card for College Students

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Card Highlights
  • Earn 2,500 bonus ThankYou® Points after spending $500 within the first 3 months of cardmembership.
  • 2 ThankYou® Points per dollar spent on purchases for dining at restaurants and entertainment.
  • 1 ThankYou® Point on other purchases.
  • Points earned with this card do not expire and there is no limit to the amount of points you can earn.
  • Redeem ThankYou Points for merchandise, travel rewards, gift cards, cash and more
  • Travel with ease and enjoy global acceptance with Chip Technology
  • No annual fee*

The Citi ThankYou® Preferred Card for College Students is my least favorite of all the student credit cards, but it might be a good fit, especially for students who spend the most on eating out and entertainment. This card also stands out for using a points system as opposed to cash back.

2 Points for Dining & Entertainment

Cardholders earn two points per dollar spent on dining and entertainment, and one point per dollar spent elsewhere. A point is equivalent to about one cent, and they are redeemed through Citi’s ThankYou Rewards Program as gift cards, merchandise, loan repayments, and travel reservations.

Standard (But Not Great) Rates and Fees

There’s no annual fee for this card, but it does have a penalty interest rate of 29.99% and a foreign transaction fee of 3%. Penalty interest rates of this amount are common, but there is no penalty rate for either of the Discover cards or the Journey® Student Rewards from Capital One® card. Most credit card issuers also charge a 3% foreign transaction fee, but Discover and Capital One stand out for skipping that too.

Cardholder Benefits

Students can enjoy quite a few perks with the Citi ThankYou® Preferred Card for College Students, including travel insurance and purchase protection benefits. New purchases are covered for repairs or refunds if your items are damaged or stolen within 120 days (90 days for New York residents). You also receive Citi’s Price Rewind service, which can automatically refund the difference if a lower price is found on a registered item within 60 days of purchase.

When traveling, you receive trip cancellation and interruption protection, which can reimburse you for out of pocket costs during travel delays.

Discover it® Secured Card – No Annual Fee

Apply Now on DiscoverCard.com's secure website

Card Highlights
Card Highlights Provided by Discover:
  • No Annual Fee, cash back on every purchase, and helps you build your credit with responsible use.
  • A security deposit of $200 or more will establish your credit line (up to the amount we can approve). Automatic monthly reviews starting at 8 months to see if we can transition you to an account with no security deposit.
  • Reports to the three major credit bureaus. Plus, get your FICO® Credit Score for free on monthly statements, on mobile and online.
  • Earn 2% cash back at restaurants & gas stations on up to $1,000 in combined purchases each quarter. Plus, 1% cash back on all your other purchases.
  • Get a dollar-for-dollar match of all the cash back you’ve earned at the end of your first year, automatically.
  • Tools to assist you; email alerts, text reminders and 24/7 customer service.
  • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Cashback Match™ details & other information.

While it’s not a student credit card, a secured card like the Discover it® Secured Card can be a valuable option to students with damaged credit, or those with an extremely limited credit history. Secured cards like this work much like other credit cards, except they require a refundable security deposit before an account can be opened. The amount of your security deposit becomes the amount of your line of credit.

Once the account is opened, you use this card just like you would any other credit card. With responsible use and a record of on-time payments, most secured card users find that they are able to qualify for a standard, unsecured card within a year. (For more options, consider our review of the best credit cards for people with bad credit.)

Access to Credit

Because it’s a secured card, the Discover it® Secured Card is available to nearly all applicants who can prove their identity and do not have any pending bankruptcy proceedings. As far as your credit report and credit score are concerned, there is no difference between this card and any other standard, non-secured credit card. For many students with poor or no credit, a secured card like this can be one of their only means to improving that credit score (unfortunately, you cannot build credit with a prepaid or debit card).

Cash Back Rewards

This card actually features the same cash back structures as the Discover it® chrome for Students credit card: 2% cash back at restaurants and gas stations on your first $1,000 in combined purchases made each quarter, and 1% cash back on all other purchases. Discover will also match your rewards earned during the first year, but this card doesn’t feature the additional cash back for students who maintain good grades.

Excluding the refundable security deposit, this card has all the same low-to-no fees and excellent customer service as all of Discover’s other credit cards.

Best Student Credit Cards: Summed Up

# Student Credit Cards Best For…
1 Discover it® for Students The biggest rewards
2 Discover it® chrome for Students Students who spend the most on eating out and gas
3 Journey® Student Rewards from Capital One® Students who want to develop responsible credit habits
4 Citi ThankYou® Preferred Card for College Students Students who spend the most on eating out and entertainment
5 Discover it® Secured Card – No Annual Fee
Students with poor or no credit

Student Credit Cards 101

We have already learned how easy it is for students to get into trouble; as Kristen Kuchar highlighted in her recent post on students’ common money mistakes, the average student leaves school with $3,000 in credit card debt.

Still, most students and parents know it is impossible to begin establishing a positive credit history without taking that risk. That’s why, for most parents and students, learning to use credit responsibly has become a priority.

Students, you must meet certain qualifications to get a credit card. Under the Credit Card Act of 2009, students ages 18-21 can qualify for a credit card if one of two things happen:

  1. A parent, guardian, spouse, or another adult is willing to co-sign
  2. You submit proof of income and financial history proving a full-time income (or even a part-time income that’s sufficient enough to pay the balance each month).

When You Need a Parent to Co-sign

If your credit history is too thin or you don’t have enough income to qualify for a card on your own, you may need a parent to co-sign for your first student credit card. This arrangement can help you in the following ways:

  • Parents with good credit can help you qualify for a card that will allow you to begin building your own positive credit history.
  • Sharing an account with a responsible parent allows you to lean on their guidance as you learn to manage credit for the first time.
  • Since both the student and the parent’s credit activity on the card is reported to credit reporting agencies, both parties can benefit from each other’s responsible use.

Co-signing Risks for Parents

There may be several benefits to having a parent co-sign for a student credit card, but there are also risks for both the parent and the student.

  • Parents who co-sign aren’t just helping their children qualify for a credit card. Co-signing also means that both parties will be held mutually responsible for all debts incurred.
  • Certain credit factors, such as high utilization, can negatively impact a parent’s credit score.
  • Shared accounts that go into default can negatively impact your credit score the same as accounts that are held privately. Both parties will also be pursued by collections.
  • The Credit Card Accountability, Responsibility and Disclosure Act, also known as the Credit CARD Act, requires students to get written permission from a parent for any credit line increase until they turn 21. After they turn 21 however, students can apply for a credit line increase without their parent’s knowledge or consent, which could increase their overall liability.

Alternatives to Co-signing

Rather than co-signing a student’s credit card application, parents can take an alternative approach by adding their adult children as authorized users to an existing credit card account. Parents then closely monitor and supervise their student’s use of this credit card, and can even “bill” students for their purchases. This offers the advantages of having a credit card in case of an emergency, while allowing parents to assist students as they learn about budgeting and credit. Being an authorized user will also add to a student’s credit history.

How Do Credit Cards Work?

A credit card actually provides a short-term loan. A less-pleasant word for a loan is debt. When you purchase lunch at a restaurant with a credit card, the credit card company pays the restaurant right away on your behalf, then gives you roughly a month to pay them back. You are legally bound to pay back that loan.

This is where the situation gets tricky. If you fail to pay your credit card balance in full each month, your card issuer has the right to charge an incredible amount of interest on the balance of money you owe. In many cases, and depending on your interest rate, that means that your $12 lunch at Applebee’s could end up costing you $15, $20, or even $30 over time. However, if a credit card is used properly, it can be an interest-free loan. You simply need to learn to pay your balance in full when you receive your credit card statement each month, or before. Even better, through rewards accumulation, you can actually be “paid” to use this loan.

Lesson: Use your credit card the same way you would use money in your bank account.

Financial Concepts Students Can Learn from Credit Card Usage

Although there are certain risks involved when you apply for any kind of credit, the pros often outweigh the cons. After all, having the opportunity to prove you are creditworthy is the only way to begin building a positive credit history, and you can’t do that without establishing credit in the first place. Even better, tiptoeing into the world of credit with a student card can teach students about some of the broader concepts surrounding proper financial management.

More than any other financial product, a credit card can teach a student about three important personal finance concepts:

  1. Cash flow
  2. Debt management
  3. Importance of credit history

Financial Concept #1: Using a credit card to manage cash flow

Cash flow is a term used to describe the act of matching up your actual spending to the cash you have on hand. Imagine your bank account as a bath tub. Think about the dollars you earn flowing into your bath tub through the spout, and the dollars you spend flowing down the drain and out the tub. In order to keep enough water in the tub, you need more water flowing into the tub than draining out.

Now imagine you have $0 in your tub and you need to buy a $5 sandwich today for lunch, but you won’t get your paycheck until Friday. A credit card can help you manage this imbalance in cash flow by paying for your sandwich today, and letting you use money to pay the credit card company 30 days from now — when you have money in your tub.

Using credit to manage your cash flow may not present a problem in itself, but it can become a slippery slope if not managed properly. If you are unable to “fill up your tub” by the time your bill comes due at the end of the month, you will be forced to carry a credit card balance into the next month. That balance will also accrue interest, which ultimately means more of your money down the drain. This idea leads to financial concept #2: debt.

Financial Concept #2: A credit card is debt

When you first start using credit, it is easy to disassociate your credit card spending with the money you have in your bank account. However, it is crucial that you remember what your credit card balance is – money you owe someone else.

With that being said, it is important to know that debt isn’t always bad. There are times when going into debt may even be beneficial, such as when you buy your first home or need to borrow money for school. Generally speaking, however, credit card debt is not beneficial debt since it usually will not improve your situation in the same ways buying a home or earning a college degree might.

It is also important to remember that any credit card debt you have will eventually accrue interest. There is currently no maximum rate a credit card issuer can charge, but it is common to see rates of more than 20%. That means that, for every $1,000 you owe, you would need to pay back an extra $200 per year.

Financial Concept #3: Credit cards help students build credit history

Financial institutions keep track of all your credit accounts, personal loans, auto loans, and home-loan transactions over the course of your life. They want to know how much you owe and the likelihood that you will pay back your loans. The compilation of this information is called your credit history. From this history, financial institutions create a credit score for you, and this score helps determine whether they will offer you a loan, such as a home loan or auto loan, and at what interest rate.

Having a good credit history is important. Not having any credit history is a negative because the lender will have no idea if you can responsibly make payments on the loan. Even if you don’t think you will be buying a home or a car for a very long time, it’s still a good idea to start building your credit history as early as possible.

If you need credit history to get a loan, how do you get a loan to start your credit history? This is the conundrum that plagues many students. A credit card is one of the best ways to start because they are relatively easy to obtain, can help you show responsibility managing cash flow and making payments on time if you use the card regularly.

How Students Get Into Credit Card Trouble

Although student credit cards can be the key to building a credit history for some students, they can quickly become a problem for students who haven’t learned to manage credit responsibly. Here are a few of the most common mistakes students make when using credit, and the implications for them:

Mistake #1: Overspending

It is easy to forget you are going into debt when you first start using credit. You simply swipe the card and go on your merry way. Unfortunately, the small purchases you don’t remember making will add up over the weeks and months. If you don’t keep track of your purchases in real-time, you may spend far more than you planned. When this happens, you can easily get whacked with an over-the-limit fee or spiral into credit card debt that becomes unmanageable.

Mistake #2: Spending just to earn more rewards

Many credit cards let you earn rewards points that can be redeemed for merchandise, cash back, or travel. It may be tempting to maximize this feature, but you should only do so with caution. The fact is, spending to earn rewards is never beneficial because your unnecessary spending often costs more than the rewards you get back.

Mistake #3: Making only minimum payments

When you carry a credit card balance into the next month, your credit card issuer will ask you to make a minimum payment. This minimum payment is usually only a small fraction of the amount you owe, which can be tempting if you are tight on cash. However, it is important to remember that the balance you carry over will accrue interest and ultimately cost you more money over time.

For example, let’s say you pay the minimum payment on your card and carry a $500 balance into the next month. If you paid $15 per month with an 18% APR, it would take you 47 months to pay your debt in full. During that time, you would pay $198.34 in interest for the privilege.

Mistake #4: Not paying your bill on time

Since your payment history is used to decide 30% of your credit score, late credit card payments are a huge step in the wrong direction. In addition to negatively impacting your score, you will also be charged a late fee that is generally somewhere between $30 and $40.

Making more than one late payment on your credit card may actually hurt your credit more than not having any credit history at all. If you opt for a student credit card, make sure to pay your payment on time every month if you want your credit score to benefit.

Mistake #5: Using convenience checks or other cash advance features

When you use your credit card at an ATM for a purchase at a store and receive cash back, or when you use convenience checks, you are triggering the cash advance feature of your card. Interest rates for cash advances are high, often around 25%, and usually start accumulating immediately. Unfortunately, many people don’t realize they are being charged so much until they receive their statement in the mail.

All these fees add up and cost you money, which is why you should avoid using these features altogether. Chances are, you have more important things to pay for than hefty interest charges or cash advance fees anyway.

Student Budget Calculator

In order to help students manage and analyze their finances, we’ve created this student budget calculator. Using this calculator, students can understand and prepare their expenses for the school year.


How Can Students Use a Credit Card the Right Way?

If you want to learn how to truly use credit responsibly, it is best to start out slow and easy. You don’t need to rush into using credit exclusively, and would probably be better off making a few small transactions each month until you feel comfortable. Here are a few more tips that might make the transition smoother:

Start small with one card and a low limit

Since the most common credit card mistake that plagues students is overspending, it might be wise to begin the process with only one card that comes with a relatively low credit limit. For example, a student credit card with a $300 or $500 credit limit offers enough credit to let you get the hang of it without offering you so much credit that you risk going far into debt.

This is also why starting with only one student credit card is also a wise choice. If you have multiple cards, it is easier to overspend and end up in credit card debt.

Make small everyday purchases, not extra purchases to get rewards

If your credit card offers rewards, don’t change your spending habits just because you have a credit card. Get used to using the card for your everyday purchases and see how you can earn points on them, not the other way around.

Understand your spending by analyzing the statement

After using your new student card for your first month, you can use the information you gain to understand your spending better. Unlike when you use cash, using credit creates a paper trail of every transaction you make. This paper trail, and the online budgeting tools the best student credit cards usually offer, make it easier to analyze your real spending and look for ways to improve it.

Online tools can also help you understand key concepts, like the difference between your current balance, minimum payment, and last month’s balance. Last month’s balance is what you need to pay every month in full by the due date to avoid interest charges.

See the graphic below:

zStudentCC-Account Summary

Pay off your balance each month

When we say “pay off your balance,” it means you need to pay the full amount you charged on your balance in the last statement by the due date. Paying your balance in full is the only way to avoid paying interest on your purchases. It is also the best way to avoid credit card debt altogether.

If you can learn to follow all of these steps all of the time, your new student credit card can help you learn to effectively manage cash flow and earn points for your everyday spending, all while building a solid credit history for the future. The best part is, by paying your balance in full every month, you can do all of this for free.

If for some reason you cannot get a parent to co-sign for your student credit card, you can also consider getting a secured credit card. The difference between a secured card and other types of cards is that, with a secured card, you are required to put down a deposit as collateral. While this situation may not be ideal, it will usually lead to better results than the alternative, which is not building a credit history at all. If you need to consider this option, check out our post on the best card cards for bad credit.

Student Credit Card Glossary

If you’re new to credit cards, it can take some time to understand the terms, conditions, rates, and fees associated with card ownership. Listed below are some of the common terms used by credit card companies that can help new cardholders better understand credit and make more informed decisions.

Annual Fee: The annual fee is a charge for using the credit card that your company applies every year. Not all credit cards have an annual fee and, fortunately, none of the top student credit cards charge an annual fee.

Annual Percentage Rate: The Annual Percentage Rate (commonly referred to as the APR) is the rate at which interest will accumulate if the credit card balance is not paid off each month. The APR is usually determined by the credit of the applicant and the current Prime Rate. The APR on student cards generally ranges from 10.99% to 23.99%. The most important thing to know is that a low APR is better than a high APR.

Introductory APR: Some credit cards will offer an introductory APR that is lower than the standard APR. In many cases, credit cards will offer a 0% introductory rate for a specified period at the beginning of card ownership. For example, two of the top student credit cards have a 0% introductory rate for the first six months. This means that interest will not accumulate on any credit balances during that time. After the introductory period is up, the standard APR will kick in.

Cash Advance Fee: The cash advance fee is a charge associated with getting cash from the credit card or taking out a loan on the line of credit. The cash advance fee for the top student credit cards is $10 or 5% per transaction, whichever is greater.

Cash Advance Rate: When a credit card is used to make normal purchases like gas or groceries, the standard APR will apply. However, when you request a cash advance, a different interest rate will be applied. The cash advance APR on many credit cards for students is roughly 25%. Cash advances are a nice convenience, but you should only use them when no other options are available.

Balance Transfer Fee: The balance transfer fee is a charge applied when you move your balance from one credit card to another. This fee is typically either a set dollar amount or a percentage of the amount transferred. The balance transfer fee on the best credit cards for students is $5 or 4% of the transaction amount, whichever is greater.

Balance Transfer APR: When you transfer a balance to a new credit card, the APR for that transaction is called the balance transfer APR. The balance transfer APR is often higher than the standard APR. With student cards, the balance transfer APR ranges from 10.99% to 23.99%. Some credit cards offer introductory balance transfer rates that work just like a standard introductory APR, but they will only be applied to the balance of the transfer.

Late Payment Fee: The late payment fee is the charge applied when a payment is not made before the deadline. These fees vary, but with student credit cards they can reach $35 to $40.

Default Penalty Rate: The default penalty rate is the interest rate applied to a portion of the credit balance (or in some cases the entire balance) when a credit card is in default. Some behaviors that can trigger the default penalty rate include missing a payment, having a payment returned for insufficient funds, or exceeding the established credit limit. The default penalty rate is typically the highest interest rate credit card issuers will apply. With student credit cards, the common default penalty rate hovers around 29%.

Overlimit Fee: The overlimit fee is the charge associated with exceeding the established line of credit. Not all credit cards will charge an overlimit fee and, fortunately, none of the top credit cards for students apply these fees.

Foreign Currency Transaction Fee: This is the fee charged when you use a credit card abroad. The foreign currency transaction fee for many cards can be as high as 3% per transaction. This may seem like a small amount, but for students in a study abroad program or heading out on a big trip, these fees can add up.

Using a Credit Card to Save for College

While researching student cards, I came across the Upromise World MasterCard®, which uses points to help parents save for their children’s college education. The points can be directed into savings accounts or investment vehicles.

The Upromise World MasterCard® combines elements of money management, building credit together, and long-term savings in one package.

How It Works

The Upromise World MasterCard® lets you rack up generous cash-back rewards on all sorts of everyday purchases, including dining, gas, and movie tickets. With no listed rewards caps, this is one of the better rewards programs you’ll find with any credit card, let alone a student credit card. Earn rewards up to 10%, depending on your purchase.

Your rewards get deposited into your Upromise account. From there, you can direct them to a Upromise savings account or a 529 college savings plan for college-related expenses. My colleague, Saundra, and her husband have earned almost $1,000 cash back in less than a year by making the Upromise World MasterCard® their primary credit card.

Spend to Accrue Cash Rewards

Get in the habit of using the card for all of your everyday purchases and paying off the balance. The rewards on this card are almost unbelievable for a student credit card, but you’ll have to plan in advance to maximize the rewards. Purchases from certain retailers yield more points than others.

For instance, Upromise partners with more than 800 online retailers like Best Buy and Macy’s. Rotating offers even let you can even save on certain Amazon purchases. Saundra always checks the Upromise website before making any online purchases to see whether the retailer is a Upromise partner. The site shows her every partner retailer, their rewards rate, and any coupons or deals they’re running to get maximum rewards. If the retailer is listed, she simply clicks through and makes her purchase like usual.

Just using the Upromise World MasterCard® and purchasing through the Upromise website often yields up to 10% cash back. Saundra recently booked a couple of nights at a hotel through a Upromise partner, Orbitz, over the holidays. Orbitz offered 6% cash back through Upromise.com, and Saundra added 5% on top of that by using the Upromise World MasterCard®. That yielded more than $20 cash back on a $200 expense that she would have had anyway.

Below are some of the rewards rates for retailers that are partnered with the Upromise World MasterCard®:

zStudentCC-Retailers

Upromise also partners with over 10,000 restaurants. Not all restaurants you visit will earn monster rewards, but Upromise has a nifty tool that can help you locate restaurant partners near you.

Here’s a quick search I did for restaurants in Chicago for the Upromise World MasterCard®:

zStudentCC-Restaurants

Save Cash Rewards and Grow Your Money

Once you get the hang of maxing out your rewards and spending strategically, you’re well on your way to saving more for your child’s education. The next important decision you need to make is how you want to direct your cash back for college savings.

The money you earn from your everyday spending with Upromise partners goes directly into your Upromise account. From there, you can choose to invest your earnings in a high-yield savings account or tax-deferred 529 plan. I am not a financial advisor, so I won’t recommend one course of action over another, but those two options do exist. Saundra and her husband chose the high-yield savings option, offered through Sallie Mae. They maximize their savings even more because Sallie Mae offers a 10% annual match on their Upromise savings.

Use Cash Rewards for Higher Education Expenses

As the money grows in your account and your child chooses a school, the time will come to use the cash rewards you’ve accumulated for college expenses. There are rules that govern how the money can be used from 529 plans, so consult with a financial professional. Generally, the money can be used for most college-related expenses.

There are additional options where the money can be used to pay down student debt, and it’s also possible to simply request a check that can be used for college or other expenses.

Get Friends and Family to Rack Up Points

Let’s face it: College is just plain expensive these days. One of the coolest features of this card is that you can get it for friends and family so they can also rack up rewards for your child’s education. This is perfect for grandparents or a godparent who wants to help out with school expenses. Their rewards can be directed into your child’s education account. Talk about a creative way to help out!

Research the Best Credit Cards for Students

Listed below, you’ll find a directory of the most popular student credit cards on the market. I used this directory as a starting point for my research and analysis.

The student credit cards directory is a custom directory that highlights the most important features for student cards and displays important information about each card. The directory is maintained and updated on a weekly basis to ensure it is always current.

Student Credit Cards Directory

The student credit card directory lists many student credit cards and the key information for each card. In order to value each of these cards, certain features were weighted based on the overall importance to the prospective cardholder.

Sort, filter, or search for what matters most to find the best student credit card for you.

Sort By Card Name
Rewards Tier Level
Common Filters No APR for 6+ Months
Good Ongoing Rewards
No Foreign Transaction Fee
Search Do you know of a card that is not in our directory? Suggest a Card Here
Credit Card
Annual Fee
Perks Tier Level
Foreign Transaction Fee
Rewards Tier Level
Apply Online
Credit Card
Annual Fee
Perks Tier Level
Foreign Transaction Fee
Rewards Tier Level
Apply Online
$0
None
No foreign transaction fee*
Average
* (?)
$0
None
2% USD, 3% Foreign Currency
None

Rating Methodology

The most important factors to consider when choosing a student credit card are rewards, error forgiveness, and support for financial learning. This rating is based on what I deemed the most important factors for deciding between the best student credit cards.

We used the features and corresponding data from the directory above. To better describe the data and overall rating, an explanation of each component is included below.

Rewards Rate

Rewards Rate refers to the actual rate at which you can earn rewards using the student card. The very best student credit cards offer up to 5% on select categories. The “base” rate is often 1%, but some student cards do not offer rewards at all. Some of the best cards offer rotating categories that enable you to earn 5% rewards points on a variety of common purchases each quarter. Other top cards will give you high percentages in a variety of categories with no caps on rewards.

Intro APR

An Intro APR of 0% is another important factor to consider when rating student credit cards because it gives students time to pay off an initial balance. However, introductory APRs should be used wisely and only out of necessity since it’s not a good idea to accumulate a large balance and hope to pay it off later.

The top student credit cards will offer 0% intro APR periods between six months and 12 months. The Upromise World MasterCard® has the highest 0% intro APR period of the best student credit cards at 15 months.

Error Forgiveness

Think of error forgiveness as training wheels for your credit card. Error Forgiveness encompasses certain features some credit card companies provide to give students a break if they pay late. This is very useful when you’re learning the ins and outs of credit cards. Late payments can ding your credit report, increase your APR, and cost you a bunch of cash in fees — up to $40 for each late payment.

Error forgiveness provisions aim to cut the student a break. Some companies don’t charge a late fee on the first late payment, while other companies don’t let the late payment affect the APR. It’s a feature most parents would appreciate.

Financial Learning Support

Financial learning support refers to supplemental materials or software that help a student learn about important financial concepts. For instance, the best student cards have charts and graphs so you can track, visualize, and learn from your spending data. You can see the types of items you buy most, where you’re a high spender, and how much you spend on average each month. This is a critical area where the top student credit cards add a ton of value.

Since one of the main reasons to use a student credit card is to start building your credit history, several of the good student cards provide you with your FICO credit score or other ways you can track your credit history.

About this resource:

Created on: May 05, 2017

Updated on: June 07, 2017

Edited by: Sarah Ban

Research by: Jason Steele, Mike Jelinek, Sarah Ban, Michael Gardon