Not so long ago, any college student who could sign his name could qualify for a credit card. But the Credit Card Reform Act mandates that applicants be evaluated on their own ability to pay the bill -- meaning they must have income or savings. Issuers can no longer look at overall household income when they consider an application.
Here are seven credit cards that offer good deals -- reasonable rates, generous rewards and no annual fee. All the rates are variable and will increase if the Prime Rate goes up. Each sends e-mail and/or text alerts to remind cardholders to pay on time -- and some include tips to help them develop good money management habits. Some issuers permit cosigners for student credit cards, but before you agree to that, see Kiplinger editor Janet Bodnar’s note of caution.
Financial education is an important part of this card. It comes with a financial-literacy handbook and an interactive Web site with useful information about building a good credit history, budgeting and identity theft. The card offers access to the bank’s Add It Up program, where cardholders can earn up to 20% cash back on online purchases at participating retailers. Bank of America looks at summer and/or part-time jobs when it evaluates whether a student is creditworthy. The card comes with a 14.24% interest rate, and the average credit limit is a little over $1,000.
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(Image credit: Source: Capital One)
Capital One Journey Student Rewards
Interest rate: 19.8%
Cosigner permitted? No
Web site: Capital One
This card offers 1% cash back on all purchases plus a 25% bonus on the amount you earn each month that you pay on time. You can earn an extra 15% cash back for purchases on Capital One’s Perk Central network. The interest rate is a steep 19.8%, and students generally receive only a $300 to $500 credit limit. Students are eligible for a credit increase after six months of paying on time and staying under their credit limit.
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(Image credit: Source: Citi)
Citi Dividend Platinum Select Visa Card for College Students
Interest rate: 12.99% to 20.99%
Cosigner permitted? No
Web site: Citi
Students can earn 5% cash back on purchases at supermarkets, drugstores, gas stations and utilities for the first six months. They earn 2%, on a rotating basis, for spending at department stores, hotels and restaurants, and other categories, and 1% on everything else. Shop at retailers that participate in the Citi Bonus Cash Center and you earn an average 5% cash back with no cap. After a seven-month 0% introductory rate, interest rates range from 12.99% to 20.99%, depending on creditworthiness.
This card rewards students for good financial behavior. Pay on time and stay under the credit limit three months in a row and your interest rate (0% introductory rate for seven months, then 12.99% to 21.99%, depending on creditworthiness) drops 0.25 percentage point. You can reduce your rate as much as two percentage points overall. You earn five ThankYou points for every dollar spent at restaurants and on books and music, and one point for all other spending. You get an extra 100 points each month for paying on time and staying under the credit limit. ThankYou points can be used for travel, statement credits, gift certificates or merchandise.
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(Image credit: Source: Discover)
Discover Student More
Interest rate: 12.99% to 19.99%
Cosigner permitted? Yes
Web site: Discover
Discover offers a 5% cash-back bonus in categories, such as restaurants, travel and groceries, that change quarterly and up to 1% on everything else. Shop at the online mall and earn a 5% to 20% cash-back bonus. The interest rate ranges from 12.99% to 19.99% after a six-month 0% introductory rate, and the average credit limit is $1,000.
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(Image credit: Source: Discover)
Discover Student Open Road
Interest rate: 12.99% to 19.99%
Cosigner permitted? Yes
Web site: Discover
Students with cars on campus might like this card. You receive 2% cash back on up to $250 a month spent at gas stations and restaurants. On everything else, you get 0.25% back on up to $3,000, then 1% back. After a six-month 0% introductory rate, the interest rate is 12.99% to 19.99%, depending on your credit history. You can receive your reward as a gift card, merchandise or cash, or donate it to charity. The average credit limit is $1,000.
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(Image credit: Target)
Target Red Card
Interest Rate: 22.90%
Cosigner Permitted? No
Web site: Target
If you\'re going to apply for a retail credit card, register at a store you frequent rather than one you visit occasionally just to purchase big-ticket items, says Linda Leitz, a financial planner based in Colorado Springs, Colo.
Applying for a retail card at a mass chain such as Target, which sells everything from groceries to clothes to laptops, may be a smart option for a 20-something looking to further build their credit history. The card allows you to get free shipping on online purchases. When you use it to fill five prescriptions at a Target pharmacy, you’ll get a rewards certificate for 5% off your next purchase, in addition to the 5% discount you get on all Target purchases as a cardholder. Keep in mind, however, that you’re only able to use the card at Target stores.
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There is no right number of credit cards — it depends on how many you can manage. Having multiple credit cards helps reduce your utilization rate and provides lenders with more information to better gauge your creditworthiness.
If your goal is to get or maintain a good credit score, two to three credit card accounts, in addition to other types of credit, are generally recommended. This combination may help you improve your credit mix. Lenders and creditors like to see a wide variety of credit types on your credit report.
The best credit card overall is the Wells Fargo Active Cash® Card because it gives 2% cash rewards on purchases and has a $0 annual fee. For comparison purposes, the average cash rewards card in 2024 gives about 1% back. Cardholders can also earn an initial bonus of $200 cash rewards after spending $500...
Key takeaways: Closing a credit card can hurt your scores because it lowers your available credit and can lead to a higher credit utilization, meaning the gap between your spending and the amount of credit you can borrow narrows. Canceling a card can also decrease the average age of your accounts.
For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2023, the average FICO® Score☉ in the U.S. reached 715.
However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.
The Apple Mastercard from Goldman Sachs is a good credit card for people who make a lot of purchases with Apple Pay, and it's easily worthwhile given its rewards and $0 annual fee.
How many credit cards is too many or too few? Credit scoring formulas don't punish you for having too many credit accounts, but you can have too few. Credit bureaus suggest that five or more accounts — which can be a mix of cards and loans — is a reasonable number to build toward over time.
Many student cards require proof of income from a part-time or full-time job or from leftover scholarship money. If you are under the age of 21, you may be required to find an adult, typically a parent or guardian, who's willing to co-sign your application.
Student credit cards can help you build your credit, establish positive credit habits and access rewards and other perks. They tend to be easier to qualify for, since you don't need to have a good credit history for approval.
We chose the Discover it® Secured Credit Card as the best teen card because it's easy to obtain if you're new to building credit. It has a $0 annual fee and earns cash back rewards on every purchase, which means you'll save money as you build credit as a teen.
For example, marketing materials for the Discover It® Student Cash Back state that a credit score is not required to qualify for the card. In the meantime, other cards state that applicants can be approved if they have fair credit or better, which typically means having a FICO score of 580 or higher.
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