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Best Student Credit Cards

Michelle Brooks

Michelle Brooks

Financial Advisor

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If you’re s student, you’re probably constantly advertised student credit cards. It can be hard to avoid getting one – you most likely get advertising letters in the mail once a week at the least. But the hardest part about choosing a student credit card is choosing the best student credit card. With so many available options, it can be hard to know which is the best route to take.

As a student, you may find that you need additional money at times to help bridge gaps in cash flow. Chances are that you work during the summers, but sometimes need a bit of extra money to see you through the rest of the year. Credit cards are a great way to have a form of revolving credit that you only pay for if you use. In addition, having a student credit card can help you build credit before you graduate. This can greatly improve your credit score and increase your chances of being approved for other credit cards, loans, or mortgages once you complete school.

Students who responsibly use a credit card while they are at school are positioned much better than their peers when they graduate. The key to this is being responsible with your card, spending within your means, and choosing the right card for you.

Unlike normal credit cards, student cards can be quite easy to get when you’re in school and have a lack of credit history. Lenders understand that you may not have any credit history as you have only just become an adult. In addition, many of these cards have interest free periods, or low-interest rates in general.

At the same time, there are many predatory lenders that target students with easy-to-acquire credit cards which then end up costing them in the future. For this reason, it is recommended that you always use an established lender, or a large bank, for your student credit card. This article will overview what you should be looking for when deciding on the best student credit card for you, as well as the advantages and disadvantages of acquiring one of these types of cards.

What to Look For

When deciding on what student credit card to opt for it’s important to consider three primary factors: interest rates, annual fees, and interest format.

  • Interest Rates – One of the primary advantages of a student credit card is their typically low interest rates. Some predatory lenders will attempt to sell you cards with higher interest rates, or rewards cards that also include higher interest rates. As a student with limited income, it’s important to make sure you opt for as low of an interest rate as possible. A good interest rate for a student card lies between 10-15 percent APR.
  • Annual Fee – An annual fee is a yearly fee you pay to your lender for the privilege of having your card. As a student, the best cards don’t have annual fees, so steer clear of lenders with annual fees on their cards.
  • Interest Format – Different lenders use different types of interest calculating formats. Some make you pay interest on whatever balance you have not paid off by the end of the lending period. Others use other calculations, such as the average balance you have throughout the billing period. You’ll want to opt for a lender that tends to only charge interest on your remaining balance as it works out cheaper in most instances.
  • Cash Back – Some student credit cards will offer you cash back if you spend a certain amount of money. These forms of rewards can be quite nice for people who want to try and get a bit more out of their credit card.

 

Advantages

The primary advantages of student credit cards lie in your ability to build credit in college. In addition, they are typically given at a much lower rate than traditional credit cards and without annual fees. If used properly, they’re an awesome way to help you bridge financial gaps during school terms. Below are some other advantages to having a student credit card when you’re in college.

  • Emergencies – If an emergency pops up, a credit card can be a good safety net to help you pay for something. Perhaps you need to make an immediate tuition payment – a credit card will ensure that you aren’t automatically unenrolled from school. This is a particularly good advantage for students who don’t have support from their families.
  • Security – Credit cards are traditionally much more secure to use than debit cards. This is because the bank is quicker to resolve credit card issues over debit card issues. If you are using your debit card to pay for things online, there’s a decent chance that your details could get stolen and your bank account could get drained. With credit cards, you can refuse to authorize payments that you haven’t made.
  • Insurance – Some student credit cards will include different forms of insurance with their credit cards. This is an awesome added feature that can help you save money. For example, some credit cards include travel insurance or purchase insurance.

 

Disadvantages

There are two primary disadvantages of getting a student credit card. The first is that you don’t collect many rewards points or miles, as the low interest rates and high risk status of your borrowing situation make it unfeasible for lenders to offer top perks. The second is that you are potentially putting yourself in a situation to accumulate credit card debt. While these cards are considered low-interest, all credit cards have high interest when compared to traditional loans. It is important that you only get a credit card if you know that you will be able to pay off in a relatively quick timeframe. A few other disadvantages are provided below.

  • Dodgy Lenders – If you don’t choose the right lender, you might end up working with a dodgy credit card company. This is because opportunists look for people who might be more desperate than your average citizen. This can often be a student who is trying to make end meets and will be willing to apply for a credit card to get their hands on additional capital.
  • Perks Can Run Out – Eventually you will graduate from university and this means that your student credit card might expire. It depends on the lender, but many lenders will not allow you the same perks and benefits of your student credit card once you’ve left school. Instead, you’ll have to apply again for a card that doesn’t have student benefits. But hopefully your credit has been built up enough for this to be a non-issue.
  • Low Limits – At the end of the day, most student credit cards have much lower limits than traditional credit cards. This is because lenders know you don’t have a solid income stream. The main downside of this is the fact that if you use the card, you’ll end up taking up a lot of the space on your available limit. Because your credit score is based off the percentage of your available credit limit that is in use, you might end up with a bad score while you’re in college. As long as you pay the balance down before your next application, your score will return to normal.

Which Student Credit Card is Best for Me?

After assessing all the information that you’ve seen mentioned above, you’re probably still wondering: Which is the best student credit card for me? This will depend on a few different factors – no single card is the best student credit card for everyone. You should ask yourself the reason that you are getting the card – this will help you determine which credit card is best for you. Below are the two primary reasons to get a student card – decide which category you fit into.

 

Building Credit

Some people get student credit cards purely to build credit. These students will most likely pay their bill in full every month, and avoid carrying a balance on the card. This means their chance of paying interest on their balance is fairly low.

If you think you are this type of borrower, then you don’t have to worry about the interest rate on the card. You should look for a credit card that offers the best outside rewards for you. If you are going to use a credit card to build credit, you might as well take advantage of some of the other benefits that credit cards can bring you.

The best student credit card for you will be one that provides you with the best dollar ratio rewards. Make sure that you know you will be paying your balance every month though – it can be costly to get into credit card debt in college. This type of card is good for someone who has help from a family, a side income, or a lot of scholarships.

 

Bridging Income

The harsh reality is that going to college is an expensive investment, and it leaves you little time to make money while you study. That’s why it can be important to bridge your income – otherwise you might not be able to make ends meet. People whom are bridging their income at university will want a different type of credit card than someone who is simply building their credit profile for the future.

If you’re this type of borrower, you should be looking for a low interest rate and no annual fee. That’s the best way to make sure that you don’t end up getting into a hole of debt that you’re not able to get out of. This will also make sure that you leave college with a better credit score – paying high interest can make it hard to keep a low balance.

 

The Process

The process to apply for a student credit card has truly never been easier. You can now apply for a credit card online and often get an instant decision. The total application process can take just a matter of minutes – you’ll just need to have your personal information ready before you start the application. Credit card companies make it as easy as possible for you to apply for a card – they don’t want you to lose interest in their product.

Check out some of the links on our site – they can take you directly to the websites of some of the best student credit cards. You can access an application straight away and get started as quickly as possible.

If you have a decision that is delayed, make sure to call up the credit card company and ask to speak to their decisions department. They can often tell you the result of the application so you don’t have to wait to get a letter in the mail. If they do turn you down, ask for the reason and request that they reconsider your application.

 

Verdict

Before applying for a student credit card, you should properly consider the amount of money you can afford to spend and pay off. It may sound easy, but paying back credit card debt is extremely hard when you’re studying on limited income. You don’t want to be trapped in a cycle. This being said, if you’re a responsible borrower, it’s a great way to start generating a credit history for a relatively low-cost.

As with any financial decision, it’s best to do your research to make sure that you can get the best student credit card for your situation. Our website has done most of the research for you, you can find a list of the best student credit cards on the market right on our homepage. We have done non-biased, independent research to give you a selection of the best possible cards.

If you don’t think a student credit card is right for you, check out some of the other cards that we suggest. Just because you’re a student, it doesn’t mean you can’t apply for a regular credit card.