Best Student Credit Cards in 2016

These credit cards are designed to make it easier for students with little to no credit history to use credit cards and build credit. They function much as regular credit cards, but with higher interest rates, a customary precaution since younger cardholders have not yet shown a history of responsible credit usage and repayment behavior.

In addition, potential cardholders must demonstrate an “independent means” of making monthly payments--perhaps a school or part-time job--or the signature of a co-signer at least 21 years old and capable of repaying any debt. This is the result of the Credit CARD Act of 2009 which made it more difficult for adults with little or no credit history to obtain cards.

MyBankTracker identified the following best credit cards for students:

1. Best Student Card With Great Rewards and Generous Perks

Discover it for Students Teaches Good Credit Behavior

Discover it for Students offers the best student credit card for cash back and benefits with no annual fee. The card has a great cash back program that pays up to 5% cashback on purchases. Discover’s student credit cards also feature a college student-friendly assortment of benefits that encourages responsible credit card behavior, including free FICO credit scores, no penalty APR, no first-time late fee and $20 cash back during each school year (max of 5 years) that your grade point average (GPA) is 3.0 or higher.

Earn Cash Back on College Spending

The Discover it cash back program has become very popular because of the 5% cash back categories that change every quarter. These categories are often season appropriate. For instance, you might earn 5% cash back at restaurants, movie theaters and gas during the warmer months, which falls in line with the spending patterns of many college students. Meanwhile, all other purchases earn a flat 1% cash back. The additional cash back incentive for students to maintain good grades makes the card even more attractive.

Why You Should Know Your Credit Score

Since 2014, credit card issuers started to provide free ways for customers to track their credit scores. The inherent belief is that customers who know and track their credit scores are going to be more responsible with their credit usage and monthly payments. Although there are many credit scores that are calculated with undisclosed formulas, the FICO credit score is the industry-standard used by lenders when judging creditworthiness.

A FICO score ranges from 300 to 850 -- higher is better. The score takes five different factors into its calculation. All this information be reviewed by you through your personal credit reports, which are free annually from the three major U.S. credit bureaus (Equifax, Experian, and TransUnion).

Free credit score programs through credit cards typically provide credit scores on a monthly basis. Normally, credit scores cost about $20 each. The card perk is advantageous to young adults in college who seek to start building their credit history so that it’ll be easier to qualify for major loans (i.e., mortgages and car loans) later in life.

What Happens When You Don’t Pay on Time

A late fee is charged when you do not make the minimum payment by the due date. The fee may vary from card to card but it usually is capped at $35 per incident. When a late payment is made, the credit card issuer may also decide to hike up the customer’s interest rate to the penalty APR, which is often defined in the card’s terms and conditions. Most credit cards have a penalty APR of 29.99% and it replaces the card regular APR.

If a college student forgets to make a payment on time, these repercussions can be financially harmful (sometimes, the card issuer doesn’t always impose those penalties). Discover it’s forgiving policy of having no penalty APR and waiving the first late fee is helpful to young adults who are just getting started with credit cards and might slip up initially.

2. Best Card to Reduce Interest Payments

BankAmericard for Students Keeps Interest Rates Low

The BankAmericard Credit Card for Students carries no annual fee and the regular APR on purchases is 11.24% to 21.24%, which is considered low among college credit cards for students. It is an excellent choice for students who want to focus on the avoiding the dangers of accumulating interest on credit cards.

Why Choose Low APR Instead of Reward?

There is a large variety of student credit cards that can offer low interest, travel rewards, cash back or other kinds of perks. The credit cards that offer rewards and perks will likely come with higher interest rates. Generally, these kinds of cards are recommended for you if you are able to pay off your monthly balances in full because you won’t end up paying any interest while reaping the rewards and benefits.

If you don’t pay off the balance, the interest charges can easily outweigh the value of the rewards. Therefore, you’d save more money by getting a low APR credit card to minimize the amount of money paid towards interest on the debt. For many college students who are just starting to learn about credit and have limited income, it would be wiser to not get a rewards credit card and opt for the low-interest credit card instead.

APRs on Student Credit Cards Depend on Credit Score

The interest rate that you receive on a credit card will vary based on your credit scores. With higher credit scores, you’re more likely to get a lower APR. As a student, you may think that you have no credit history because you’ve never owned a credit card before. However, if you have taken out a student loan or a car loan, you actually started to build credit already.

Not only does it increase your chances of qualifying for a credit card, it could also help you to get a higher credit limit and/or a lower APR if you do happen to obtain a student credit card.

3. Best Card With No Credit History

Capital One Secured MasterCard Helps Students with No Credit

The Capital One Secured MasterCard is the optimal credit card for a college student who has absolutely no credit history and is unable to qualify for a regular unsecured credit card. It has no annual fee, but it requires a security deposit to act as collateral. Use the card responsibly for at least 12 months and you may be able to qualify for a regular credit card. The card comes with Capital One’s free Credit Tracker tool to help you see the improvement in your credit.

How to Check Your Free Credit Reports

The three major credit bureaus -- Equifax, Experian, and TransUnion -- are responsible for keeping personal credit reports for everyone in the country. If you’ve never opened a credit card or taken out a loan, your credit reports are essentially blank and you have no credit history. When lenders see check your credit reports, many of them will be hesitant to give you a credit card or loan because you haven’t proven that you can handle debt.

Tip: By federal law, you can pull one free credit report from each of the three major U.S. credit bureaus annually at AnnualCreditReport.com .
In the situation where you truly cannot qualify for a credit card, you may turn to a secured credit card.

Unlike a regular credit card, a secured credit card requires you to deposit cash as collateral -- the amount of the deposit will also happen to be your maximum credit limit on the card. The card will still report your card activity to the credit bureaus so that you can build your credit. As your credit improves, some secured credit cards can become unsecured cards.

Credit Card Qualification Laws for Students

Due to the new financial regulations, most college students will still need income or a co-signer to be approved for a secured credit card. According to guidelines set forth by the Federal Reserve, credit card companies will evaluate your income or assets and current debt obligations using information recorded on your credit reports. The card issuer must look at the debt-to-income ratio, debt-to-assets ratio or your income’s ability to repay debt. Unfortunately, credit card issuers do not reveal the exact minimum requirements needed to determine eligibility for a student credit card. It is unclear whether the collateralized nature of secured credit cards will make it easier for students to qualify for them.

When applying for any credit card, you will be asked for your total annual income, source of income and monthly housing payment (i.e., rent, mortgage or other). Some credit card companies may ask for more information including your amount of liquid assets and types of bank and investment accounts. They may also require that you show proof of income after you’ve submitted your application.

Without enough income or assets, a student would have to turn to a co-signer who agrees to take on responsibility for the debt in the event that the student doesn’t make payments. The co-signer can be anyone who is at least 21 years old with enough credit to get a credit card, but students often turn to parents, guardians, family members, significant others and friends for potential cosigners.

How to Choose and Use Your Student Credit Card

Picking the right major, earning good grades, and carving a solid career path are some of the most important things a college student can do for their future - and so is building a credit history. Until it comes time to pay student loans, a mortgage, or an auto loan, a credit card is your tool to build credit.

If you’re thinking about applying for one of the cards we’ve listed above, but you’re not sure about using credit beyond the basics, don’t worry. Here are a few credit card tips to help.

Choose the Right Card

Don’t assume that because your credit history is limited that your choices of a credit card should be. Take care in the credit card you apply for. Think about what your immediate needs are and how the card can benefit you best.

We recommend starting with a secured card to build credit and then later graduating to another card with more perks central to your credit life. And don’t fall into the trap of thinking you need to have a revolving balance to earn credit. All you have to do to earn credit is use it - so use your credit card but pay it in full every month. That way you can build credit and avoid debt.

Buy Small, Not Big

Speaking of purchases, it can be tempting to put some big-ticket buys on your card. After all, the money doesn’t need to be paid back right away. But this can put you at risk for debt - which can damage your credit score and your financial health.

Instead of using the credit card for big purchases, try using it for small, everyday items like gas and groceries. By keeping your purchases frequent but your balance manageable, you’ll be able to ensure that you can pay your bill in full every month.

Don’t Juggle Too Many Cards

Less can sometimes mean more, especially when it comes to credit cards. While it may seem that it’s better to have more cards, that’s not always the case. No matter how much you want to impress future lenders, it’s more important to create habits that will keep your finances healthy and growing.

It can sometimes be beneficial to have multiple cards for different rewards, but when you’re just getting started, keep it simple. Stick to just one or two for now (perhaps one secured card and one basic student rewards card) and switch them up from month to month and purchase to purchase.

Be Vigilant in Protecting Your Credit and Your Identity

It may seem inconsequential before you’ve built credit, but it’s important to start checking your credit report now (and continuing to check it often).

You get access to your credit report for free with AnnualCreditReport.com. Since this shows your report from the top three credit reporting bureaus (Experian, TransUnion, and Equifax), you could check one of them every four months to keep you on top of it throughout the year.

Checking your credit report can keep you aware of your credit activity, but also alert you to any fraudulent behavior that can leave your credit score vulnerable. On campus or off, be careful of giving away any personal information that can be used to compromise your identity or your finances. Likewise, protect your credit cards. If yours is stolen or misplaced, immediately contact your credit card provider to report the loss.

Did you enjoy this article? Yes No
Oops! What was wrong? Please let us know.

Ask a Question

SimonMBT
Tuesday, 31 May 2016 6:31 PM
<p>The minimum starting security deposit is $49. With that, you get a $200 credit line.</p><p>However, if you want a credit line of more than $200, you'll have to increase your security deposit.</p>
Sunday, 22 May 2016 5:56 PM
<p>Hi, what is minimum security deposit for Capital One secured card? $200 credit line sounds so low!</p>
MyBankTracker
Monday, 02 May 2016 4:38 AM
<p>Katia, the balance transfer APR falls to the regular balance APR, which is the same as regular purchase. You can always check what the APR becomes after the introductory period by viewing the card's terms and conditions.</p>
katiayoung
Saturday, 30 Apr 2016 12:29 PM
<p>Hi, I'm interested in the Discover It card, and see that they're interest for balance transfers is 10.99% for 6 months. Do you happen to know what it is after the 6 months is up? I'm not seeing it on there. Thanks.</p>
MyBankTracker
Friday, 29 Apr 2016 8:53 PM
<p>Ana, the exact income criteria to qualify for a credit card is unknown to the public, so it is difficult to say whether or not she can get a student credit card without a co-signer. The best approach is to be able to prove as much income as possible in the months prior to applying for a student credit card.</p>
MyBankTracker
Friday, 29 Apr 2016 8:47 PM
<p>Justin, unfortunately, there is usually no shortcut to making your credit score increase quickly (unless you remove a major negative mark such as a bankruptcy from your credit report).</p><p>If you're not under the age of 21, you may be able to qualify for a fair-credit credit card with a FICO credit score of around 650 (the exact number will vary greatly by card and lender).</p>
MyBankTracker
Friday, 29 Apr 2016 8:29 PM
<p>Lucy, the Discover it card for Students is a great all-around student credit card with rewards and great perks for a young adult. As for building credit quickly, there is no special card that will speed up the process.</p><p>Here is an article on the ways that you can boost your credit score to 700+: <a href="http://www.mybanktracker.com/credit-cards/credit-score/how-raise-credit-score-above-700-254098" rel="nofollow">http://www.mybanktracker.com/c...</a></p>
MyBankTracker
Friday, 29 Apr 2016 8:12 PM
<p>Piper, even if you have enough money for a security deposit, you'll have to pass the lender's standards for issuing credit cards to students. So, without a co-signer, the lender will review your income and expenses to determine if you'll qualify for a secured credit card.</p>
disqus_IYKrUxW1Xy
Thursday, 28 Apr 2016 7:20 PM
<p>My younger sister is starting college in the fall, and she's had her job throughout high school. Would that be enough for her to be able to get a credit card without a co-signer? She works more hours during the breaks and summer.</p>
MrJustinBradshaw
Tuesday, 26 Apr 2016 3:04 PM
<p>I am just now starting to build my credit, and have a full-time job and in school. Is there a card you would suggest to build it faster, or is it all dependent on the use and payments of it? And how long would it normally take to get a good enough credit to NOT have a co-signer?</p>
disqus_IK833n1mzI
Monday, 25 Apr 2016 7:36 PM
<p>What is the best recommended card to build credit, and quickly for students?</p>
Friday, 22 Apr 2016 2:28 PM
<p>So, after reading this, even if you pay a cash collateral on some of these cads, you may still have to get a co-signer? I have no family, and no friends I know well enough to ask to co-sign for me. But I have worked at my job since high school. If I put a collateral of a couple thousand, can I get one of these cards without a co-signer?</p>
MyBankTracker
Tuesday, 19 Apr 2016 2:24 PM
<p>Fernando, you can first review your credit reports through <a href="http://AnnualCreditReport.com" rel="nofollow">AnnualCreditReport.com</a> (a goverment-sanctioned site). If you don't find any negative marks there, you should be fine to apply for any student credit card.</p><p>Just make sure, however, that the law requires that you prove you have sufficient income or a co-signer to qualify for a credit card if you're under the age of 21.</p>
MyBankTracker
Tuesday, 19 Apr 2016 2:22 PM
<p>Jack, we would recommend that you visit our Credit Cards FAQs page for a great general overview of credit cards: <a href="http://www.mybanktracker.com/credit-cards/faq" rel="nofollow">http://www.mybanktracker.com/c...</a></p>
Saturday, 16 Apr 2016 8:02 PM
<p>Hi I'm looking to apply for my first credit card, I'm not sure what is my credit score, should i check it first or just try it? I'm thinking to go with capital one student credit card. Advice please!</p>
Wednesday, 13 Apr 2016 8:46 PM
<p>I'm very new to credit cards, where could I find more info about all this?</p>
MyBankTracker
Tuesday, 12 Apr 2016 5:51 PM
<p>Allison, for students who happen to have bad credit early on, a secured credit card is probably better option than a regular student credit card. The Capital One Secured MasterCard, for instance, is a solid choice. Check out some of the best secured credit cards: <a href="http://www.mybanktracker.com/credit-cards/secured/best" rel="nofollow">http://www.mybanktracker.com/c...</a></p>
Sunday, 10 Apr 2016 4:43 PM
<p>Are there any other student credit cards for bad credit?</p>