Ask an Expert: What Is the Best Credit Card for Students?

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This post was written by Logan Abbott. Logan is the editor of the credit cards section of MyRatePlan.com. 

A Money Talks News reader recently wrote me with the following question:

I am currently a full-time college student with a part-time job. I have never had a credit card before, and I’m interested in applying for my first card. I don’t really plan on using the card to make any big purchases. I’m mainly interested in getting a start on building my credit, and also would like some rewards as well.

Which student credit card do you recommend for a first time credit card customer?

Thanks,

Michael

My response

Credit cards are a great way for someone with no credit history to begin establishing credit. There are many credit card offers geared toward students – but deciding on which credit card to apply for can be confusing.

I recommend two different types of credit cards: a secured credit card aimed at people with no credit history, and an unsecured student credit card.

If you have little to no credit history, it can be difficult to get approved for an unsecured credit card. However, you can still apply and get approved easily for a secured credit card. These work almost exactly the same as regular, unsecured credit cards, but they require a cash deposit up front to collateralize the line of credit you are applying for. Secured credit cards report your usage history to the major credit bureaus, so your credit history will start to improve when you use the card responsibly.

I recommend the Capital One Secured MasterCard because it offers a credit line of up to $3,000, which is high for a secured credit card.

The drawbacks of a secured credit card include low credit limits, annual fees, the cash deposit required up front, and the lack of a rewards program.

If you have a decent credit history, or can provide proof of income, then you should definitely look into applying for an unsecured student credit card. My favorite student credit card on the market right now is the new Discover it for Students card. The Discover it for Students card offers 5 percent cash back at restaurants and movies through the end of March on up to $1,500 in purchases, 1 percent cash back on all other purchases, and a 0 percent introductory APR on purchases for six months. The Discover it for Students card also does not require an annual fee, and has no overlimit fees or foreign transaction fees. In addition, Discover will not charge you a late fee on your first late payment, or increase your APR for paying late.

With the Credit CARD Act of 2009, the United States government put into place new regulations designed to protect college students from predatory lending practices and confusing credit card terms, but ultimately, student cardholders have to take it upon themselves to use their credit cards responsibly in order to build their credit history. No matter which card you end up getting, you should make sure you pay off your balance on time and in full each month and stay within your credit limit.

Note: While we attempt to be completely objective when reporting on credit cards, this site may be compensated by issuers when a reader applies for a credit card through the links within credit card stories or on our credit card search page.

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