Student credit cards, particularly student rewards credit cards, can be wonderful tools for young people to start building credit. Students will need credit when they are ready to apply for a job and when they are ready to rent or buy a home. Some student credit cards also come with rewards. It’s beneficial for students to shop around and to learn all the particulars regarding what each credit card offers before they pick one.
Credit card offers change constantly. If you are in the market for a student credit card, you need to check out the offers just before you are ready to apply. Besides only looking at the student credit card rewards that credit cards offer, you need to look at the other terms too, such as what the interest rate is and the late payment fee and policy. Here are some interesting deals offered in 2014 that were good deals for students. You can use these as examples of what to look for when you are ready to shop.
What’s impressive about the Discover it student card is the 2 percent cash back rewards it offers on gas and restaurants, up to $1,000, each quarter. All other purchases you make on this card earn you 1 percent cash back. This card has no annual fee, no penalty interest rate (some card issuers raise the interest rate if you make a late payment), no late fee the first time, no over-limit fee and no foreign transaction fee, which comes in handy if you will study abroad. You can also see your FICO score for free with each monthly statement. You pay 0 percent interest the first six months you have the card, and then the interest rate will be between 12.99 percent and 21.99 percent, depending on your creditworthiness.
The Citi ThankYou rewards card lets you redeem points for gift cards, travel or cash back. You get 2,500 bonus “ThankYou” points if you spend $500 within the first three months you have the card. You get two points, instead of the standard one point, for every dollar you spend on entertainment and dining. The interest rate is 0 percent for the first seven months; it then switches to a variable rate between 13.99 percent and 23.99 percent. There is no annual fee.
The Capital One Journey card is a good choice for students with fair or limited credit because, after making five monthly payments on time, you can gain access to an increased credit line. This rewards card lets you earn 1 percent cash back on all purchases with no limits and no expiration dates. If you pay your bill on time, you get a 0.25 percent bonus on the cash earned, making the rewards really 1.25 percent cash back. You also get a free credit tracker to monitor your credit score. The interest rate is 19.8 percent, and the card has no annual fee.
Tip: A student rewards credit card benefits you most when you carry no interest on the card. Any interest you pay negates your reward. Use your card only for what you can afford to pay off at the end of the month to reap the full benefit of your rewards card. If you know you will carry a balance each month, choose a card with the lowest interest rate you can get, even if that means getting a student card that offers no rewards.
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