Getting a credit card as a student can be difficult. Banks don’t want to give credit to people that aren’t able to pay it back. That’s why the student credit card was created. These cards typically have smaller limits, rewards, and are a way for students to build credit for the future. As long as you pay on time, you can build a credit score--something essential for getting a loan or mortgage down the road.
The Credit Card Act of 2009, however, made it so that one can’t be issued a credit card under 21 unless a parent and/or guardian cosign or the student has their own income. Here is a list of some of the student card options.
The Bank of America Travel Rewards Credit Card (for students)
With this card, you can earn 1.5x the points for every $1 spent on purchases. These points don’t expire, and as a bonus for signing up, you automatically get 25,000 points. In addition, there is no transaction fee. However, there are no bonuses to increase rewards, high balance transfer fees, or high penalty APR and late fees. There is even no introduction APR offer on balance transfers.
The Discover it Student Cash Back Card
With this card, you can earn 5% cashback on rotating bonus categories. This includes a $20 statement credit each school year, one's GPA is higher than 3.0, and a first-year cashback match. There are some cons such as a low 1% base reward rate, that one’s bonus categories must be activated quarterly, and that 5% cashback is limited to $1500 spending per quarter.
Bank of America Cash Reward Credit Card for Students
With this card, you earn a welcome bonus, competitive cashback reward rates, a free FICo score, and a 0% intro APR offer with a generous term. However, you can get a high penalty APR and late fee, 3% foreign transaction fee, and high standard APR depending on your credit.
Discover it Student Chrome
With this card, you can double your rewards with a cashback match after the first year and get bonus rewards categories. It is also easy to get approved. However, some rewards categories have earning limits and many places outside of the United States do not accept Discover.
Chase Freedom Student Credit Card
With this card, there is no annual fee, a free credit score, a $20 reward every year for five years if you’re in good standing, and a 1% cashback on all purchases. There is also a credit limit increase after making five payments on time and a $50 welcome bonus if you make your first purchase within three months. Some cons, however, are that there is no 0% APR promotion for balance transfers or purchases and no bonus categories on spending.
Deserve EDU Mastercard for Students
With this card, there are no foreign transaction fees, no social security number required, and no cosigner or deposit required. There is also a free one-year Amazon Prime Student membership. Some cons, however, are that there are high regular APRs, you must have a US bank account with a certain balance, and there are no balance transfers of cash advances.
The Main Differences Between a Credit and Debit Card
Aug 04,2020 · 6min read · 1084 views
Choosing the right card can be tricky. With tons of debit and credit card options out there, it’s hard to figure out what might be the best option for you. Here are all differences between a credit and debit card and some tips to help you make an educated choice.
Credit vs. Debit Card
First and foremost, it’s important to understand the main differences between a credit and debit card. It’s easy to confuse the two; they look similar, feel the same, and both function at the grocery store or the mall. However, the main difference is that while a debit card takes money directly from your bank account, a credit card is charged to what’s known as your credit line. This is essentially the amount of money that you can charge to your card.
What is a credit card?
A credit card essentially allows you to borrow money from a lender. Once you open a credit card, you’ll receive a credit limit. This is the maximum amount of money you can borrow to make purchases every month. It’s based on a range of factors including income, but most importantly your credit history. Anytime you make a purchase it will be charged to your line of credit which you’re liable to pay for at a later date. Typically, payments are interested free, however, if you forget to make a payment you may be responsible for a late fee. Usually, this will happen if you fail to pay within 30 days.
In most cases, you need to have a social security number and be at least 18 years old to qualify for a credit card. If you’re 18 years old and lack a valid source of independent income or assets, you’ll likely need a parent or guardian to co-sign. Otherwise, you’ll need to wait until you're 21 years old. Reported income in general is how banks decide whether you’re likely to repay debt as well as how large your credit line should be.
If you’re a college student, a student credit card is another option. Some of the best student credit cards available may even offer a $0 annual fee and 1% cashback rewards. You can also opt for a secured credit card. This essentially requires you to make a deposit before opening an account, but it is another good option for people with poor credit or those just starting out.
According to MoneyUnder30, most credit card companies require applicants to have a credit score of 700 or more to qualify. Many of the better credit card offers will typically also require longer credit history, while credit card companies that accept lower credit scores may have higher interest rates.
What is a debit card?
As mentioned, a debit card is linked directly to your bank or checking account. Unlike a credit card, where you borrow money on credit, with a debit card, the money is pulled directly from your account. Most debit cards function with a PIN number which you’ll input anytime you take money out of an ATM or make a purchase. One of the best perks about a debit card is that it does not affect your credit score -- that three-digit number that has the capacity to derail or assist with your financial wellbeing.
There’s also no need to worry about late payments because the money is immediately taken from your account as long as you keep a running balance. If you’re out of funds, your card will simply be declined. Anytime you use a debit card, the bank puts a hold on the amount spent and money will either be deducted immediately or within a few days.
What is the best option for me?
There are a number of factors to take into account when choosing between a debit or credit card. Here are some of the things to consider when making your decision:
Are you a chronic overspender?
If you tend to overspend, you might want to consider a debit card. One of the perks of a debit card is that you can only spend what’s in your bank account which essentially prevents you from going over your limit or racking up debt. With a credit card, you can spend up to your allotted line even if you don’t have that available in your account because your credit card is not directly linked. This makes it easy to go over budget but could also lead to dreaded credit card debt. Some debit cards also have prepaid options, which allow you to load a fixed amount of money on your card.
Are you trying to build credit?
If this is the case, definitely go with a credit card. Building your credit and maintaining a good credit score can help you get perks like better interest rates and loans in the long-run. As long as you pay your bills on time, you should be a good shape. Credit cards also offer reward programs and great incentives like cashback options or airline miles. This is definitely something to consider, although your financial wellbeing and future should take center stage when opting into a credit card.
Other things to consider:
With any card, fraud or identity theft are always a risk. However, which card you have might dictate how much of your money you get back. This is because of how much you are liable to pay in the event of identity theft differs. If someone uses your debit card and you report it missing or stolen within two business days, you’ll only be liable for up to $50. Your maximum loss increases to $500 if you wait more than two days after learning about the theft but less than 60 days after receiving your statement.
With a debit card, the amount you’re liable for increases the longer you wait and could mean you lose it all if you wait more than 60 days after getting your statement to report the theft. However, thanks to the Fair Credit Billing Act, you’re only liable for $50 when your card is stolen. Theft obviously isn’t at the top of our minds when settling on a card, but it is definitely something to consider when thinking about which option to choose.
When choosing a credit card, consider interest rates and always read the fine print. The average credit card interest rate for June 2020 was a little over 20 percent, according to the balance. Some credit cards offer zero percent interest for the first few billing cycles.
Interest rates can also lead to hefty charges if you pay late. This offers a way for the lender to make money off of their customers. Ultimately, the better your credit score, the lower your interest rates.
To see some of the perks you can get with a credit card, check out this storyon some of the best credit card sign-up bonuses.