Heading off to college is an important time in the lives of many young people. For most of them, they’ll be more responsible than they’ve ever had to be in their lives, and this includes managing their own money and expenses, and creating a budget that they can live with.
Learning smart money habits is critical and those lessons, if learned properly, will last a lifetime. And while the decision to apply for credit cards should not be taken lightly, having and using a credit card smartly helps young people learn the ins and outs of all things associated with good credit and how to keep it that way.
If you’re a new college student, or the parent of one, here are a few things to know about applying for credit cards for college students, information about interest rates, and much more.
How to Apply for a Credit Card
In 2009, the U.S. government passed some laws that changed the way that credit cards work. The biggest way that this affects college students is that an applicant must be over 18 years of age, prove sufficient monthly income, or have a parent or guardian as a co-signer.
Since many full-time college students who are not 18 years old don’t have jobs with sufficient income, a co-signer is typically the only way to qualify. Parents need to be aware that their own credit score could potentially be impacted if the bills are not paid on time, but co-signing for your child is a great way to help them build a credit history while learning how to budget their money and avoid impulse purchases.
Capital One Journey Student Rewards Card
To encourage prompt bill paying this card from Capital One offers 1 percent cashback on all purchases, but the reward makes a leap to 25 percent when the bill is paid by the due date. There is also no fee leveraged for foreign transactions and that comes in handy if studying abroad becomes an option.
This card does come with an interest rate of nearly 20 percent and a $35 fee for late payments, so this is a card that is best used by conscientious students and the parents that trust them.
Discover It for Students Card
Similar to the offer from Capital One, the Discover It card is free from foreign transaction fees and no annual fee. The card earns 2 percent cashback on purchases up to $1,000 at restaurants and gas stations, and 1 percent for all other purchases.
This card edges out its competitors with a six-month interest-free period, but the rate changes to 22 percent after that. Parents should sign up for online access to their child’s account in order to keep an eye on their spending and become aware if they nearing late payments, which carry a $35 fee.
Another good option from Discover is the Discover It Good Grades cards. Your student will earn $25 each year their GPA is 3.0 or higher.
Citi ThankYou Preferred Card for Students
With many of the same benefits as its competitors, the Citi ThankYou Preferred Card for Students sweetens the deal a bit with 0 percent interest for the first seven months, then a variable interest rate of between 13 percent and 22 percent after that. 2,500 bonus points are given if $500 is spent on the card in the first three months, and two bonus points are awarded for every dollar spent at restaurants other entertainment venues such as movie theaters and amusement parks.
The bonus points awarded by this card are useful for travel, and can even be used to pay any student loans that may have been incurred. The bottom line is that the Citi ThankYou card is a good choice and offers pretty good bonus rewards.
Taking out a credit card as a college student is a decision that should be made with care. Credit cards are a fact of modern life and learning how to use them wisely is something that any student should be proud of.
Students, talk to you parents about their experience with managing their credit and have a frank and open discussion about their feelings related to co-signing for you.
Parents, talk to your kids about the importance of sticking to a budget and the proper and responsible use of credit cards.
At the end of the day you’ll take home an A+.
Marjorie McAtee is a freelance writer whose work has appeared on numerous websites including BakPakGuide.com, Listosaur.com, Slogr.com, and SanDiegoFreePress.org. She is a graduate of Hollins University and is currently working toward a Master of Arts in Professional Writing and Editing at West Virginia University. Her literary work has appeared in publications including Amarillo Bay, Flashquake, Center: A Journal of the Literary Arts, and The Blotter.