U.S. Markets open in 7 hrs 58 mins

5 Key Things To Look For When Choosing Your First Student Credit Card

Casey Bond
Student credit cards should have no annual fee and generous rewards. (SIphotography via Getty Images)

As a college student, I didn’t have a credit card. I considered myself to be pretty responsible with money ― I worked part-time for a financial planner, after all ― and a credit card seemed like an unnecessary temptation to overspend. Sure, I racked up more overdraft fees in my checking account than I care to admit. But hey, at least I was debt-free.

So you can imagine my surprise when, at the age of 22, I decided I was ready for my very first real adult credit card, yet couldn’t get approved for one. It turns out you need to use credit to get credit ― something no one ever bothered to tell me.

In order to avoid this frustrating Catch-22, you should start using credit as early as possible. And considering that student credit cards can have some pretty great perks, college is the perfect time to get started.

Building Credit In College

Americans now collectively owe a staggering $1.5 trillion in student loans, so young adults would be smart to avoid any situation that lands them deeper in debt. But the truth is that our society is built on borrowing money, and if you avoid credit completely in college, you could end up having a tough time accomplishing basic financial goals once you’re out.

That’s not to say you should resign yourself to a life of debt. A credit card can be a tool or a trap, depending on how you use it.

“Credit cards should be viewed as a tool to start building credit rather than as ‘free money,’” said Keri Danielski, a consumer finance expert and spokeswoman for Intuit’s money management tool Mint. “It’s important that students start building good habits such as paying bills in full, on time, creating budgets (and sticking to them) and managing their credit scores.”

In other words, the goal is to start practicing good financial habits now before you have to navigate the “real world” all on your own. It’s not to use credit cards as a crutch or a means to buy things you can’t actually afford.

So now with that admonition out of the way, let’s take a look at how, exactly, you go about picking the best credit card.

What To Look For In A Student Credit Card

One of the advantages of getting a credit card as a college student is that you can qualify for student credit cards. These cards are certainly not all great, but many generally offer perks that benefit students specifically. Here’s what you should look for in a student credit card ― or any credit card, for that matter:

1. Low-interest rate: Ideally, you should pay the entire balance on your card every month so you don’t accrue any interest charges. But just in case you do need to carry a balance over to the next month, you can minimize the amount of interest you’re charged by choosing a card with a low APR. Currently, the average student credit card APR is 13.14 percent. Keep in mind that as a college student without much credit history, you might not be able to qualify for the lowest rates. However, the APR is a good comparison point when you evaluate different offers.

2. No annual fees: Some credit cards will charge a yearly fee of anywhere from $25 to $500, usually because the cards offer some sort of rewards program or special perks. However, there are plenty of free rewards cards on the market, so there’s really no good reason to choose a credit card that charges an annual fee.

3. Adequate credit limit: You credit limit is the maximum amount of money you’re allowed to have charged to the card at any given time. “Most student credit cards have low credit limits, often around $500,” said Danielski. It’s important to choose a card with a limit that’s high enough for you to manage expenses, but not so high that you could end up in hot water if you run up a balance.

4. Rewards: As mentioned, there are a ton of rewards credit cards available today, which let you earn points for spending on certain categories that you can redeem for merchandise, travel and more. Student credit cards in particular often offer rewards on purchases that college students are more likely to make. “Pick the rewards system that works best for you,” said Danielski. “If you live off campus and buy your own groceries, then 5 percent cash back at grocery stores may be a good reward for you.” 

5. Other perks: In addition to rewards points, some student credit cards offer additional incentives and benefits. For example, some cards will give you extra rewards for paying your bill on time or for maintaining good grades. Although it’s not a requirement, you should consider a card that offers these types of perks when deciding which one to pick.

Our Picks For The Best Student Credit Cards

With all the credit cards out there, narrowing down your options can feel overwhelming. So if you’re not sure where to start, we selected a few of the top student credit cards available right now to get you started.

Best overall rewards: Discover It Chrome for Students

This student credit card from Discover offers some of the best rewards around. You can earn 2 percent cash back on up to $1,000 in combined purchases at gas stations and restaurants each quarter. Plus, you earn 1 percent back on all other purchases. As an added bonus, Discover will match all the rewards you earned in the first year. And each school year you maintain a GPA of 3.0 or better, you’ll be credited back $20 on your account.  

Best introductory APR: Bank of America’s BankAmericard Credit Card for Students

If your top concern is avoiding interest charges, this card could be a great choice. According to Bank of America, this card offers one of the lowest APRs of all their cards. In fact, you pay 0 percent APR (as in, no interest at all) for the first 15 months.

Best incentives for responsible use: Journey Student Credit Card from Capital One

In addition to earning 1 percent cash back on all purchases, Capital One will bump up your rewards rate to 1.25 percent for paying your bill on time. After five months of on-time payments, you can also qualify for a credit line increase.

Best for international students: Deserve Edu Mastercard

If you’re an international student, there are other considerations when choosing a credit card. This student card is designed specifically for international students and doesn’t require a Social Security number to apply. The rewards are also generous: Not only do you get a free Amazon Prime student membership, but you earn 3 percent back on travel and entertainment, 2 percent back on restaurants and 1 percent back on all other purchases.

Best secured card: Discover It Secured

If you have no credit history at all or maybe even poor credit from a slip-up in the past, there’s a chance you might not be able to get approved for a traditional credit card. Don’t worry if that’s the case; consider getting a secured card instead.

A secured credit card works similarly to a regular credit card except that you pay a deposit up front. That deposit serves as your “line of credit.” By paying your bill on time each month, you’ll improve your credit score and eventually be able to graduate to a traditional card.

Discover offers a solid secured card option, which provides all the same rewards and benefits of the traditional Discover It Chrome card outlined above.

The Dos And Don’ts Of Managing Your Card

Once you’ve chosen the right card for you, the real challenge is using it correctly so you don’t accidentally harm your credit score. Here are the dos and don’ts you should keep in mind as you use your new credit card.

Don’t: Miss payments. Missing payments is just about the worst thing you can do for your wallet and your credit. Late payment fees can be as high as $27, and payment history accounts for 35 percent of your credit score. Even just one missed payment can have a damaging effect, so be sure to make all your payments by the due date.

Do: Keep your balance low. Even though you have a credit limit, it’s really not a good idea to use it all. How much you owe in relation to the credit you have available ― which is called your credit utilization ratio ― makes up 30 percent of your credit score. The lower your balance, the better. And maxing out your card is a definite no-no. Not only will it harm your score, but it will also make it tougher to pay it off.

Don’t: Spend without a plan. Since you want your credit card to work for you and not against you, it’s important to use it strategically. For instance, maybe you only charge one recurring monthly payment to the card to keep it active, and always pay it off immediately. Or maybe you save your card for food purchases only to reap the rewards points. In any case, have a plan for your credit card spending. You can use a tool like Mint to keep tabs on your spending and ensure it stays in line with your overall budget.

Do: Pay the whole balance. Credit card debt can sneak up on you. It might not seem like a big deal to carry a balance to the next month, but if it becomes a habit, that interest has a snowball effect. Compound interest ― when interest is charged on interest ― quickly adds up and a few months of not paying off your credit card balance is especially harmful,” said Danielski. Be sure you know your card’s APR and do your best not to accrue interest if possible.

Don’t: Forget it’s not free money. Keep in mind that purchases you make with a credit card still have to be paid back out of your pocket. A credit card is not an excuse to buy a new laptop, take a weekend trip or go on a shopping spree,” said Danielski. “All the money you charge on a credit card will be your responsibility, whether you pay for it now or later.”

  • This article originally appeared on HuffPost.
  • Finance
    CNBC

    Morgan Stanley: The stock sell-off is going to get worse

    The stock market is in the middle of a rolling bear market, says Morgan Stanley's Mike Wilson. "It's being caused by a drain in liquidity and peaking growth," Wilson says. The stock market sell-off is only going to get worse, predicts Morgan Stanley's chief U.S. equity strategist, Mike Wilson.

  • Why New Age Beverage Corp. Stock Popped Today
    Business
    Motley Fool

    Why New Age Beverage Corp. Stock Popped Today

    Shares of New Age Beverage Corp. (NASDAQ: NBEV) were climbing again today, riding a surge on marijuana stocks as growers like Tilray, Cronos Group, and Canopy Growth all jumped by double digits. Along with the bullish sentiment in the industry, a number of other factors seemed to be driving New Age shares higher, including the recent hiring of a new CFO, the upcoming legalization of recreational marijuana in Canada on Wednesday, and the market's reaction to its launch last week of a new line of beverages infused with cannabidiol (CBD). On Friday, New Age named Gregory Gould as its new CFO, a notable move as Gould brings experience from the pharmaceutical industry, which should help the beverage company as it moves into CBD products.

  • Sears bankruptcy could make these 5 big companies multi-million-dollar losers
    Finance
    Yahoo Finance

    Sears bankruptcy could make these 5 big companies multi-million-dollar losers

    Being an unsecured creditor of Sears (SHLD) right now is not a good place to be. The 125-year old former retail icon filed for chapter 11 bankruptcy protection early on Monday, crippled from years of losses and mounting debt. Sears plans to close about

  • Brits Are All Making the Same Joke About the New Royal Baby
    News
    Time

    Brits Are All Making the Same Joke About the New Royal Baby

    Meghan Markle, the Duchess of Sussex, is expecting her first child with Prince Harry. The news, announced Monday morning by Kensington Palace, has already been greeted by hundreds of messages of congratulations for the royal couple on social media. The U.K. is set to leave the European Union on March 29, exactly two years after Prime Minister Theresa May started the formal process for doing so by invoking Article 50 of the Lisbon Treaty.

  • Why Marijuana Stocks Canopy Growth, Cronos Group, and Tilray Crushed It Today
    Business
    Motley Fool

    Why Marijuana Stocks Canopy Growth, Cronos Group, and Tilray Crushed It Today

    The three Canadian marijuana stocks that currently trade on major U.S. stock exchanges enjoyed big gains on Monday. Shares of Canopy Growth (NYSE: CGC) were up 14% as of 3:48 p.m. EDT, while Cronos Group (NASDAQ: CRON) and Tilray (NASDAQ: TLRY) jumped 18.9% and 12.1%, respectively. Two of the three marijuana growers reported new developments earlier in the day.

  • These are the bad things about early retirement that no one talks about
    News
    MarketWatch

    These are the bad things about early retirement that no one talks about

    For all the glamour of living an early retirement lifestyle, there are plenty of negatives I’ve come to discover since I permanently left my job in 2012. As a result, you’re repeatedly forced to will yourself into action.

  • Elizabeth Warren Calls on Trump to Pay $1 Million After Releasing DNA Test
    Politics
    Fortune

    Elizabeth Warren Calls on Trump to Pay $1 Million After Releasing DNA Test

    Elizabeth Warren is ready for her pay day. The senator from Massachusetts took to Twitter Monday morning, calling on President Donald Trump to cough up the $1 million he promised if she proved she had Native American heritage.

  • Netflix (NFLX) Stock Sinks 1.9% Ahead of Q3 Earnings: What to Watch
    Finance
    Zacks

    Netflix (NFLX) Stock Sinks 1.9% Ahead of Q3 Earnings: What to Watch

    Shares of Netflix NFLX dipped 1.9% during regular trading hours Monday just one day before the streaming TV giant’s third-quarter earnings release. With that said, let’s take a look at what investors should expect from Netflix’s Q3 financial results Tuesday. Netflix fell short of its own subscriber projections by 1 million last quarter.

  • Jamal Khashoggi was accidentally killed during interrogation: report
    Politics
    Fox Business Videos

    Jamal Khashoggi was accidentally killed during interrogation: report

    Fox Business foreign policy analyst Walid Phares on the report that Saudi journalist Jamal Khashoggi was accidentally killed.

  • As Cannabis D-Day Approaches, Winners and Losers Set to Emerge
    Business
    Bloomberg

    As Cannabis D-Day Approaches, Winners and Losers Set to Emerge

    After Canada legalizes recreational marijuana on Oct. 17, it will only take a quarter or two for clear winners and losers to emerge, according to investors and analysts who follow the sector. “These have all been concept stocks and they’re going to actually have to be real companies in another few months, which I think a lot of guys are terrified about,” said Greg Taylor, who manages the Purpose Marijuana Opportunities Fund. Taylor prefers CannTrust Holdings Inc., Hexo Corp. and Organigram Holdings Inc., which he says trade at a “more realistic valuation” than some of their bigger peers.

  • After years of wasting time in meetings, 3 former Googlers decided to do things differently at their new startup
    Business
    Business Insider

    After years of wasting time in meetings, 3 former Googlers decided to do things differently at their new startup

    The executives of the startup Beeswax, all former Google execs, say they've learned how to keep meetings streamlined and efficient. The three founders of the ad-tech startup Beeswax seem to get that. "We're all thoughtful about not having a proliferation of meetings, because one thing we all felt in our previous careers is that there can be lots of redundant meetings," Shamim Samadi, Beeswax's chief product officer, told Business Insider.

  • 2 Hot Marijuana Stocks Listing Soon on U.S. Exchanges -- Are They Buys?
    Business
    Motley Fool

    2 Hot Marijuana Stocks Listing Soon on U.S. Exchanges -- Are They Buys?

    Two marijuana stocks that are currently listed on Canadian stock exchanges soon plan also to list on U.S. stock exchanges. Aurora Cannabis (NASDAQOTH: ACBFF) (TSX: ACB) expects to trade on the New York Stock Exchange (NYSE) by the end of October and Aleafia Health (NASDAQOTH: ALEAF) should soon trade on the Nasdaq stock exchange. Are these hot marijuana stocks that are coming soon to U.S. stock exchanges smart picks to buy now?

  • Saudi Arabia Breaks 45-Year Taboo With Veiled Threat to Use Oil as a Weapon
    World
    Bloomberg

    Saudi Arabia Breaks 45-Year Taboo With Veiled Threat to Use Oil as a Weapon

    While few think that Saudi Arabia is prepared to follow through, even the suggestion of using oil as a weapon undermines Riyadh’s long-standing effort to project itself as a force for economic stability. The anxieties were exacerbated by an opinion piece penned by Turki Al Dakhil, who heads the state-owned Arabiya news network and is close to the Royal Court, in which he openly talked about using oil as a weapon.

  • Business
    TheStreet.com

    Canopy Growth Is Poised to Explode to the Upside

    Shares of Canopy have soared 68% over the past three months. In this daily bar chart of CGC, below, we can see that prices are up five-fold over the past 12 months. CGC was trading at $10 back last October and now is trading around $50 with spikes above $55 last month.

  • This Is the Average American's Salary. How Does Yours Compare?
    Business
    Motley Fool

    This Is the Average American's Salary. How Does Yours Compare?

    In an age of oversharing, many of us are remarkably tight-lipped when it comes to talking salary. But in reality, knowing where you stand can help you determine whether you're in a good place or whether you should be taking steps to boost your earnings

  • Marijuana stocks to watch: Canopy Growth is the cannabis business’s $4 billion gorilla
    Business
    MarketWatch

    Marijuana stocks to watch: Canopy Growth is the cannabis business’s $4 billion gorilla

    The following article is part of a package of stories that MarketWatch is publishing to mark the start of full legalization of cannabis for adult use in Canada on Wednesday. Smith Falls, Ontario–based Canopy Growth Corp. made headlines and drove cannabis stocks to new heights over the summer when it announced that Corona brewer Constellation Brands Inc. was going to invest an additional $4 billion in the company. Billed by both companies as a strategic partnership, the additional $4 billion investment adds to the 9.9% stake that Constellation bought in October of last year and sets the company up to either be bought outright by Constellation — via warrants that could increase its stake to more than 50% — or continue to work with the beverage company to create a range of consumer-focused cannabis products that may one day appear in markets in dozens of countries.

  • Goldman Sachs and Raymond James cut Netflix price target ahead of earnings
    Business
    Yahoo Finance Video

    Goldman Sachs and Raymond James cut Netflix price target ahead of earnings

    Netflix getting its price target slashed by both Goldman Sachs and Raymond James ahead of its highly expected earnings report tomorrow. Both firms are concerned that rising interest rates could pinch the company’s valuation.

  • Business
    CNBC

    Cramer's No. 1 fear in this market? The rally in shares of Clorox

    CNBC's Jim Cramer explains why a surge in a stock like Clorox can mean bad news for the broader economy. The "Mad Money" host connects the move to the Fed's rate hike plans. As the stock market tried and failed to regain its bull status on Monday, with the tech sector driving the major averages lower into the close, what really worried CNBC's Jim Cramer were the stocks going up.

  • Warren Buffett predicted the fall of Eddie Lampert and Sears over 10 years ago (SHLD, BRK.A, BRK.B)
    Finance
    Business Insider

    Warren Buffett predicted the fall of Eddie Lampert and Sears over 10 years ago (SHLD, BRK.A, BRK.B)

    Sears filed for Chapter 11 bankruptcy early Monday, the culmination of a downward spiral. CEO Eddie Lampert, once called the "next Warren Buffett," will also step down. Incidentally, Buffett predicted the retailer's and Lampert's downfall in 2005.

  • Finance
    TheStreet.com

    Monday Madness: Is Nvidia a Hit or Miss?

    TheStreet's Julie Iannuzzi covered Jim Cramer's investing boot camp. Nvidia (NVDA - Get Report) has long been a favorite of TheStreet's founder and Action Alerts Plus Portfolio Manager Jim Cramer, but he told a packed audience Saturday at his Boot Camp for Investors in New York why his charitable trust recently sold out of the stock.

  • Better Marijuana Stock: Aurora Cannabis vs. Auxly Cannabis Group
    Business
    Motley Fool

    Better Marijuana Stock: Aurora Cannabis vs. Auxly Cannabis Group

    One is market cap: Aurora's market cap is nearly 18 times bigger than Auxly's. Then there's stock performance. Here's how Aurora Cannabis and Auxly Cannabis Group stack up against each other in the areas that do matter.

  • Many U.S. mall owners say good riddance to Sears
    Finance
    Reuters

    Many U.S. mall owners say good riddance to Sears

    The real estate investment trusts that own the malls and shopping centers where many Sears stores are anchor tenants have waited years for the retailer's demise to renovate the sites and boost rent, although redevelopment costs may strain some plans. Most large U.S. malls are controlled by REITs. In recent years, the REITs have cut their exposure to Sears Holdings Corp, which filed for Chapter 11 bankruptcy on Monday.

  • Why Marijuana Stocks Cronos Group, Canopy Growth, and Tilray Jumped Today
    Business
    Motley Fool

    Why Marijuana Stocks Cronos Group, Canopy Growth, and Tilray Jumped Today

    The stock market pulled back on Monday, with major benchmarks failing to build on the positive momentum from last Friday. Cronos Group (NASDAQ: CRON), Canopy Growth (NYSE: CGC), and Tilray (NASDAQ: TLRY) were among the best performers. All three of these stocks have something in common: They all stand to benefit from Wednesday's effective date for legal sales of recreational cannabis product in Canada.

  • Here’s How Prince Harry and Meghan Markle’s Baby Will Change the Line Of Succession
    News
    Time

    Here’s How Prince Harry and Meghan Markle’s Baby Will Change the Line Of Succession

    Prince Harry and Meghan Markle are expecting a baby in spring 2019, Kensington Palace announced Monday morning. Harry and Meghan married in May, becoming the Duke and Duchess of Sussex. Now, the question is where the new arrival will fit into the line of succession of the British royal family.

  • Bankruptcy judge approves financing to keep Sears open
    Business
    Reuters

    Bankruptcy judge approves financing to keep Sears open

    Sears filed for Chapter 11 bankruptcy protection in White Plains, New York earlier on Monday with a plan to close about 142 of its 700 stores by year-end and sell its best-performing stores in an auction in January to a buyer that will keep them operational. The bankruptcy filing by the parent of Sears, Roebuck and Co and Kmart Corp follows a decade of revenue declines, hundreds of store closures, and years of deals by billionaire Eddie Lampert in an attempt to turn around the company he acquired in 2005 for $11 billion. Lampert, who stepped down as Sears CEO on Monday but will remain chairman, had pledged to restore Sears to its glory days, when it owned the tallest building in the world and companies that included a radio station and Allstate insurance.