Discover It Student Cash Back: Best For Everyday Spending
Why we picked it: The Discover it Student Cash Back gives 5% cash back on a different category each quarter up to the combined quarterly maximum, then 1% , plus 1% cash back on all other purchases. With calculated spending, students can take advantage of strong rewards while sticking to a college budget.
Pros: This no-annual-fee card offers a 0% intro APR for your first six months on purchases , allowing you to carry an interest-free balance during that time period. Also, Discover will match the cash back youve earned at the end of your first year, increasing the value of your rewards. Thanks to this perk, its no surprise that this card and the Discover it Student chrome are considered to be two of the top choices by our experts.
Cons: The rotating categories may not be helpful for someone just starting out because it takes a fair amount of organization to use you have to sign up each quarter and track which categories apply for those three months. Also, theres no sign-up bonus, so you have to wait until the end of your first year to get your matched rewards.
Who should apply? Any student prepared to get started with a credit card should take a good look at the Discover it Student Cash Back. Its affordability and consistent rewards are some of the best in its class. Plus, you can take advantage of Discover matching your cash back at the end of the first year.
Read our Discover it® Student Cash Back review.
Do You Have To Be A Student To Get A Student Credit Card
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College is a time of discovery. You’re learning how to study without your parents reminding you, how to prioritize your time, what’s the cheapest pizza place that delivers to the dorms, and just how much coffee it takes to keep your eyes open during that 8 a.m. class. And with help from a student credit card, you can also learn how to manage your money wisely.
As the name implies, student credit cards are designed to help college students get comfortable with managing credit. You usually have to be a student to get a student credit card although there are some exceptions, most student credit card applications require you to prove that you’re currently enrolled in school.
Could a student credit card help you on your journey toward becoming financially savvy? Keep reading to find out.
First Find Out Why Then Explore Your Other Options For Obtaining Credit
If you’re in college and want to get a credit card for emergencies or to start building your credit, a student credit card can be an excellent option. They’re easier to qualify for if you don’t have an established credit history, and you can get one even if you only have limited income from a part-time job.
However, your application isn’t guaranteed to be approved. Depending on your situation, you could be denied because of your credit history, student status, or for other reasons. If you’re wondering, “Why am I getting denied for student credit cards?,” here’s what you should know.
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Getting One Early Has Many Benefits But Comes With Some Risks As Well
It used to be that signing up for your first credit card was one of those college rites of passage. Youd fill out some forms at a booth on the quad, get a free T-shirt or Frisbee, and receive your plastic a few weeks later in the mail.
It was so easy that many college students ended up with more credit cardsand more debtthan they could easily manage, especially when the recession hit. The Card Act of 2009 changed all that, making it a lot harder for adults under 21 to obtain a credit card and barring issuers from marketing to them.
Now, if unemployed younger students want to get a card, theyll need their parents help.
There are some valid reasons for a parent to provide assistance. Getting a card early can help students learn to manage credit responsibly, and it provides a source of funds that could be tapped in an emergency 24 hours a day.
Students can also benefit from building up a good credit history before they graduate from college. That puts them in a better position when they graduate and theyre looking to get loans for their first car or their first home, says Bruce McClary, a spokesman for the National Foundation for Credit Counseling.
If you think your college student is ready for a credit card, follow the steps below.
The Secret Alliance: Colleges And Credit Cards
4 Min Read | Sep 24, 2021
Thats because credit card companies know what they are doing. Their research shows that people are the most loyal to their first credit cardits the one theyll have the hardest time cutting up. Companies like Bank of America and Chase know that if they can get college students earlyeven with a co-signer, then they have a great chance of keeping them for life.
Recent signed by President Obama nixed some of these aggressive marketing practices. But there are still plenty of problems, because the credit card issuers wont back down. Many schools are still aligned with credit card companies, and these companies can still pay colleges to receive access to students.
According to the Huffington Post Investigative Fund, some of the nations biggest and most well-known schools sell students personal information to credit card companies, earn royalties when students open a card and maintain a balance, make money when students use their cards, and even use their own marketing to promote these credit cards.
Now that students must be 21 to receive a credit card, these companies have changed their tactics. Instead of credit cards, many students now use a student ID that is linked to their loan accounts. With the swipe of a card, a student can easily access that money and use it for any purpose.
The core of this is a behavior issue.
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Things To Consider Before Adding A Child As An Authorized User
There are a few reasons why you might not want to add your children as authorized users on your credit cards.
Remember that charges made by authorized users are ultimately your responsibility as the primary cardholder. Make sure that your kids are mature enough to understand the cause and effect of swiping or entering a card number for every purchase. You can add your child as an authorized user and not actually share the card with them if you think they are not ready for the responsibility. You also may be able to set monthly spending limits for your authorized user American Express makes this simple under the card management section of your online account.
Keep in mind that some cards charge an annual fee for adding authorized users , so if youre only using this to teach your kids about credit or to help them build a credit history, use a card that doesnt charge fees for additional users.
If you supply information about your kids as part of the authorized-user application , then it will almost certainly go onto their credit report. However, it might end up there even if you dont provide a Social Security Number based on other identifying information.
Remember that if you incur negative marks on your credit accounts, it may affect your authorized users too. If you run into financial trouble, you should remove your children as authorized users to protect their credit histories.
Primary And Authorized User Card Responsibilities
Once added to the account, your authorized user will receive a separate credit card in their name. Some credit card issuers even issue different account numbers for authorized users. Even with their own card, the authorized user is simply allowed to make purchases on the account. They typically can’t make any other transactions, such as cash advances or balance transfers. Nor can they make changes such as closing the account, requesting a credit limit increase, or adding users.
Keep in mind that you’re responsible for all charges made on your card, even those made by an authorized user. Even if the authorized user has verbally agreed to pay for their charges, the credit card issuer generally holds the primary account holder responsible for the balance.
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Have Help With Emergencies
Why should college students have credit cards? An important benefit of having a credit card in college is that youll have money available if or when an emergency arises. This can bring comfort to parents knowing that if something were to happen, their child would have access to funds in their time of need. Whether you need money for emergency health care, car repairs, or a trip, your credit card can be a lifesaver.
With being off from work these past couple months due to COVID-19, my 1st Financial Bank USA credit card really helped when I needed funding for essential living expenses. I was so thankful to have this card to fall back on. Truly a lifesaver during all of this! – Dakota, 1FBUSA cardholder review from OH
Yes, very helpful! I was able to get home in an emergency because I could get gas with my credit card. – RJ, 1FBUSA cardholder review from TX
Practice With A Debit Card For Kids
Getting your child a bank account with a debit card can be a good first step toward a credit card. Using a debit card feels a lot like using a credit card – except theyll be unable to overspend, which is a good lesson to learn.
In fact, when Phil Rishers mother gave him a debit card as a kid, he thought it was a credit card. After about a year of being good, I over-drafted my account and my card was declined in front of all my friends, says Risher, who is the founder of YoungAdultSurvivalGuide.com. Talk about embarrassing. I went home and explained to my mom how this credit card didnt work.
In the end, that hiccup forced Risher to learn about money and become more responsible. My mom probably did not realize how valuable allowing me to fail was at the time, but I attribute most of my success to that experience.
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What Is An Authorized User
An authorized user is someone who has charging privileges on a credit card account. Some credit cards also provide authorized users with many of the same benefits the primary cardholder receives. Although the credit cards history may report to the authorized users own, separate credit profile, an authorized user is not legally responsible for the debtthe primary cardholder is.
A Secured Credit Card Offers No Risk To You
Secured credit cards require a deposit to qualify , which lessens the risk for the issuer. The amount deposited typically determines the credit limit. It may require lending or gifting, say, $200 or $300 upfront to help your college student build credit, but it may be worth the cost for peace of mind. Activity on the card only impacts your college students credit history, and the credit limit offers a cap on spending. Even if you do choose to help with the bill, you’re not responsible for it.
If your college student maintains a good payment history, they can get the deposit money back after closing the account or upgrading to a better credit card with the same issuer. Before choosing a secured credit card, outline expectations for managing the account and the returned deposit. It may also be an option to gift the deposit to your student as an incentive for responsible use of the account.
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Should You Get A Student Credit Card
Many students start to build credit in college. Learn the pros and cons of getting a student credit card and how to build credit wisely.
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Consider Whether You Need Student Loans
If you need financial aid to complete your undergraduate degree, you may want to look into federal student loans.
Many students and young people encounter a frustrating credit conundrum: It can be difficult to qualify for the best private loans or credit cards with little to no credit history. But how does one build a credit history without those loans and credit cards?
One way to start is with a federal student loan. While private student loans may require an established credit history, most federal student loans dont require a credit check. That means you can borrow the money you need to pay for school and build your credit by paying back those loans responsibly and on time.
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Should You Pay For College With A Credit Card
by Teri Cettina
One recent day, John Morell watched his son, Blake, receive a diploma at the Berklee College of Music graduation ceremony. The elder Morell hoped that, finally, he’d be able to check off the Pay Tuition” box on his list of parental duties.
Although Blake received a diploma, he still had to complete a final, required internship the summer after graduation. Soon, the elder Morell got an unexpected surprise: a $3,200 tuition bill for the internship.
“I only had a week before the payment deadline,” Morell recalls, adding: “so I decided the fastest option was to use my credit card.”
Morell is hardly alone. With rising college costs, many students and parents find themselves tempted to charge tuition expenses on their credit cards, especially with so many rewards programs available.
School administrators seem to be on board with the practice: According to a 2016 Creditcards.com survey, 97 percent of community colleges and 85 percent of four-year colleges now accept tuition payments via credit card.
Morell’s story has a happy ending: Blake passed the internship, and he earned a few thousand extra points on his credit card.
Here are some of the smartest ways to score an A+ grade in weighing the pros and cons of college-related credit card payments:
Does Being Removed As An Authorized User Hurt Your Credit
Not always. If the primary cardholders credit history is giving the authorized users credit a boost, try waiting before removing him or her from the account. Once the authorized user has his or her own established credit history, it will most likely be safe to be removed without experiencing a ding to the authorized users credit score.
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Practice Good Credit Habits
Once you open your first line of credit whether its a credit card or a student loan youll want to manage that credit wisely.
Knowing how credit scores work and why credit is important can help you make smart financial decisions. Here are a couple of quick tips to keep in mind.
- Pay off your balance on time and in full. Paying what you owe on time and in full shows lenders that youre reliable and will pay off your debts. Its often a significant factor in determining your credit scores.
- Avoid opening multiple accounts at once. Your new credit may influence another portion of your credit. People with short credit histories who rack up lots of new accounts in a short period of time might be seen as riskier borrowers than those with long histories and fewer accounts.
Learn How To Manage Money
Understanding how APR works when you’re carrying a credit card balance, how to budget to meet monthly payment obligations, and building a strategy to make your credit use work for you through rewards and cash back programs are all ways that having a credit card can build a foundation for financial success.
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Explore Other Credit Options
If you can’t qualify for a student credit card, you have some other options for obtaining credit and building a strong credit history:
- Secured cards: Secured credit cards are for people with no credit history or poor credit. They require a security deposit, but as you make payments, you can improve your credit and eventually qualify for a conventional, non-secured credit card. If you’re shopping for a secured credit card, look for one that reports your account activity to all three major credit bureaus.
- Store credit cards: These cards, which can only be used at a particular retailer, are usually easier to qualify for than other cards. If you make all of your payments on time, that will help you establish credit. However, store credit cards also tend to have very high interest rates and some other pitfalls.
- Offered by some banks and credit unions, credit builder loans are small loans specifically designed to improve your credit. As you make payments on the loan, your payment history is reported to the credit bureaus, helping you build your credit.