Discover it® for Students to Earn Cash Back While Building Credit: Review
Building credit while you’re still in college can benefit you long after you graduate. A good credit score can make your financial life easier if you want to apply for a car loan, refinance your student loans or someday buy a home.
One of the easiest ways to start improving your credit rating is to get a credit card while you’re in school and use it responsibly. The Discover it® for Students card is a great choice for students who want to work towards a better credit score while earning some cash back. There’s also a nice reward for getting good grades.
You’ll get free access to your FICO credit score so you can keep track of how you’re doing and this card is exceptionally fee-friendly. There’s no annual fee and no foreign transaction fee, which is great if you’re planning to study abroad while you’re in school.
If all of that sounds good to you, keep reading our review to decide whether the Discover it® for Students card belongs in your wallet.
Build Credit As a Student While Earning Cash Rewards
Earning a little money back on the things you buy is a great incentive when you’re a college student and trying to make every dollar count. The Discover it® for Students card allows you to earn cash at two different levels.
Earn 5% back quarterly
First, you can earn 5% cash back each quarter in rotating bonus categories, on up to the first $1,500 in purchases under those categories. That comes to $75 in cash back you could score if you reach that spending threshold. After that, you’d keep earning 1% cash back on those purchases until the new quarter begins.
The bonus categories reflect the kinds of purchases students are more likely to make. For example, you may get 5% back on Amazon.com purchases in one quarter, then 5% back at gas stations and restaurants the next. If you max out the 5% bonus each quarter, that adds up to $300 in cash back each year, which can come in handy if you’re trying to save money.
The categories tend to be appropriate for the season. So, it is likely to you’ll be able to take advantage of the bonus cash back categories
Tip: You have to remember to activate the 5% bonus each quarter. Otherwise, you’ll only earn 1% back on those purchases.
Earn unlimited 1% cash back on all other purchases
Aside from the 5% cash back bonus, you’ll also earn 1% cash back on the rest of your purchases. At this level, the amount of cash back you earn is unlimited so the more you spend, the more cash back that goes into your pocket.
Good grades mean cash bonuses
Besides that, Discover offers a $20 cash bonus each year that your GPA is a 3.0 or higher. That annual bonus is good for up to five years so if you’re a stellar student, that’s another $100 in cash back you can earn without having to spend anything extra.
Redeeming your cash rewards
Discover gives you plenty of choices when it comes to how you can use your cash back rewards. Your cash back rewards don’t expire as long as your account is open and in good standing. You can redeem in any amount, at any time for things like:
- Statement credit
- An electronic deposit into your checking or savings account
- Gift cards to partner merchants
- Charitable donations
One other redemption option is something that students are likely to appreciate. You can use your cash back to pay directly at checkout when you shop at Amazon.com. If you’re buying a new laptop for school or trying to find a deal on textbooks, your cash back can save you a few bucks on the cost.
Tip: If you redeem your cash rewards for a gift card, Discover will add $5 free to each card.
These Card Extras Make Your Life Easier
The cash back program is arguably the best reason to consider a Discover it® for Students card but there’s more to it than just that. There are some added benefits you don’t want to overlook.
First, there’s free access to your FICO credit score each month. If you’re clueless about what a FICO score is, it’s a three-digit number that lenders use to decide whether or not to approve you for credit. This score ranges from 300 to 850 and the higher your score is, the better.
|Credit Score Ranges||Credit Quality||Effect on Ability to Obtain Loans|
|300-559||Very Bad||Extremely difficult to obtain traditional loans and line of credit. Advised to use secured credit cards and loans to help rebuild credit.|
|560-649||Bad||May be able to qualify for some loans and lines of credit, but the interest rates are likely to be high.|
|650-699||Average/Fair||Eligible for many traditional loans, but the interest rates and terms may not be the best.|
|700-749||Good||Valuable benefits come in the form of loans and lines of credit with comprehensive perks and low interest rates.|
|750-850||Excellent||Qualify easily for most loans and lines of credit with low interest rates and favorable terms.|
Being able to see how your score is changing from month to month is good because it helps you pinpoint what you’re doing right and wrong with credit. For instance, paying on time and keeping your balance low can add points to your score. Paying late or using up your entire credit line can have the opposite effect.
|FICO credit score factors||Percentage weight on credit score:||What it means:|
|Payment history||35%||Your track record when it comes to making (at least) the minimum payment by the due date.|
|Amounts owed||30%||How much of your borrowing potential is actually being used. Determined by dividing total debt by total credit limits.|
|Length of credit history||15%||The average age of your active credit lines. Longer histories tend to show responsibility with credit.|
|Credit mix||10%||The different types of active credit lines that you handle (e.g., mortgage, credit cards, students loans, etc.)|
|New credit||10%||The new lines of credit that you've requested. New credit applications tend to hurt you score temporarily.|
In addition to your credit score, you get 100% U.S. based customer service with the card and you can pay your bill by phone as late as midnight ET on the due date.
Save More on Fees and Interest
Other credit cards like to pile on the fees but the Discover it® for Students card keeps them to a minimum. As we mentioned earlier, there’s no annual fee and no foreign transaction fee. There’s also no late fee the first time you miss a payment and no overlimit fee.
Even if you don’t make a payment on time, you won’t be hit with a penalty APR. This is the interest rate that takes over when you miss a payment.
Discover Security Features Give You Increased Peace of Mind
Having your credit card hacked can open you up to some major financial problems. Fortunately, with the Discover it® for Students card you’ve got some protections built in.
This card has an EMV chip for added security when you shop in-store. Discover offers a $0 liability guarantee if someone uses your card to make unauthorized purchases. The Freeze It switch lets you turn your account on and off, which is really helpful if you lose your card. If you ever need a replacement card, you can one shipped to you overnight for free.
Is There a Better Discover Card for Students?
The Discover it® chrome for students card has lots of appealing features but it’s not the only Discover card that’s designed to appeal to college-goers. Here are two other cards that might catch your eye if you’re a student.
Discover it® chrome for students
The Discover it® chrome for students card also pays you cash back but the terms are a little different. Instead of getting 5% back on rotating bonus categories, you automatically earn 2% cash back at gas stations and restaurants, on the first $1,000 in combined purchases each quarter. All other purchases earn 1% cash back.
You get the same cash back match after the first year and the $20 cash bonus for your GPA. The $0 annual fee is also the same. What you have to ask yourself is where you tend to spend the most? If you regularly charge gas purchases or go out to eat, this card could be more valuable if the 5% bonus categories associated with the Discover it® for Students card aren’t things that you normally spend on.
Discover it® Secured Credit Card
Secured credit cards are another option for building credit when you’re starting from scratch. They work like this: you put up a cash deposit and that typically serves as your credit line. When you make a purchase, that reduces your available credit until you make a payment. In the meantime, your account activity is reported to the credit bureaus, which hopefully helps to improve your score.
With the Discover it® Secured Credit Card, you can open an account with as little as $200. One thing that sets this card apart from other secured cards is its rewards program. Like Discover it® chrome for students, you earn 2% cash back at gas stations and restaurants, up the first $1,000 in combined spending each quarterly. For every other purchase, you earn 1% back. Discover matches your cash back for the first year. If you don’t have the minimum credit score needed to get the other cards, this one may be the answer.
|Discover it® for Students||Earn 5% cash back on certain categories that change every quarter.|
|Discover it Chrome for Students||Earn bonus cash back at gas stations and restaurants.|
Final Verdict: For Students Who Pay Off Their Balances
If you’re in school and you’re hoping to earn some cash rewards while working your way towards a better credit rating, the Discover it® for Students card can certainly help you achieve those goals.
This card is really best for someone who doesn’t mind the rotating bonus categories. Also, you should never carry a balance on the card because the interest would erase the value of the rewards.