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The Hunt for the Best Student Credit Card

It’s hard to cross a university campus these days without seeing at least one flyer, pamphlet, or kiosk promoting a new student Visa credit card or student MasterCard. “No interest for 6 months!” “No credit history? No co-signer? No problem!”

The student credit-card offers often seem too good to pass up. But are they?

There are plenty of reasons why a college student would want a student Visa. But before signing up for the next offer that pops up, there are several things to consider.

For one, these special deals give college students a way to build credit history without first having credit history. Students usually have a difficult time qualifying for regular cards with attractive interest rates and higher credit limits because of our limited credit histories. Interest rates on student cards are high (in the mid to upper teens), but, if you’re not carrying a balance, it won’t matter. Pay the bill off each month (seriously, pay it off) and you’ll start building a credit history that will qualify you for a better card deal later.

Student credit-cards also offer rewards specifically-geared towards students, such as discounts on music, textbooks, and coffee.

Here are a few student credit card offers that FiLife — with help from CardRatings.com founder Curtis Arnold — would recommend, depending on your needs and discipline. These cards provide some of the best deals on rewards, whether you’re looking for cash back or gift cards redeemable at your favorite retailer.

• The Citi Dividend Platinum Select Card for College Students offers 5% cash back on purchases at places like supermarkets, gas stations, and convenience stores for the first six months (it drops to 2% thereafter), and 1% on all other purchases.

• The Citi MTVU Platinum Select Visa Card for College Students gives five “Thank You Points” for every dollar spent at restaurants, bookstores, record and movie stores, and movie theaters. You also get points biannually for a good GPA (ranging from 2,000 points for a 4.0 down to 250 points for a 2.5) and some more every month if you pay your bill on time.

• The Discover Open Road Card for Students is popular among commuters and freshmen who go home every weekend: it offers 5% back on the first $100 you spend on auto expenses each month, and up to 1% back on all other purchases.

If you plan on carrying a balance on your student card — or don’t trust yourself enough to pay on time or at all each month — forget rewards and look for the card with the lowest interest rate. While rewards are enticing, the higher rates associated with these cards won’t be offset by any cash back or other bonuses you may get.

We found two student credit cards with (relatively) low rates:

• The Citi Platinum Select for College Students (13.49% variable annual percentage rate), a card that’s similar to the Citi Dividend card but with a lower rate and less perks.

• The First National Bank of Omaha College Visa Card (10.61 – 14.61% variable annual percentage rate), a card that seems great as long as you don’t mind banking in…wait, where is Omaha?

Keep in mind that these rates are variable, which means if interest-rates rise, the rate on your card will also probably rise, too.

If a parent or a financially-stable sibling co-signs your application for that student Visa, you might qualify for a lower rate (if your co-signer has a solid credit history, you’ll probably get a rate in the 10% range). If you’re late on your payments, however, your co-signer’s credit history will suffer right along with yours. A co-signer might also help you get a higher credit limit than the usual starting limit for student credit cards of about $500.

Finally, if you’ve established a credit history in high school, you might try and qualify for a non-student credit-card. But Curtis suggests that you know your credit score before you do: scores in the 700-plus range get the best rates. But if you’re score is in the mid-600s or below, you may be better off with a student card.

Be sure to do your homework.

–Daniel Hay