Before your child heads off to college, you might consider getting her a credit card. This can provide your child with funds during an emergency, and with a credit card, he can begin building his credit history. However, many credit card companies target college students, and with so many options, finding a credit card for your student isn’t always easy.
Here are a few things to consider when searching for a student credit card.
Credit cards that offer a lot of perks and incentives are famous for annual fees. But if you’re looking for a credit card for your student, consider cards that do not feature an annual fee, such as the Discover Open Road Card for Students and the Citi Forward credit card. Both credit cards offer a low interest rate, plus your student can enjoy 0% interest on purchases for the first seven to nine months.
Annual fees vary, with most credit cards charging at least $39 a year. If your student applies and accepts a card with an annual fee, he will have a balance before he uses the card.
As a parent you may have mixed emotions about your student having his own credit card, due to fear that he will rack up major charges. This is a natural concern. But rather than hold him back, encourage him to apply for cards that offer a low initial limit. Banks that offer unsecured cards typically give newbies credit limits under $500. However, your student can apply for a secured credit card with his bank or another bank and acquire a credit line as low as $200. Credit lines on secured credit cards are determined by an applicant’s security deposit. These types of accounts can help your student build good credit, while keeping his outstanding debt to a minimum.
If your student will use his credit card to pay for books and other college supplies, consider the benefits of a credit card that offers cash back or reward points. Ideal choices include the Journey Student Rewards from Capital One and the Discover Student credit card. With the Journey Student Rewards card, your student can earn 1% cash back on all purchases, plus a 25% cash back bonus for simply paying his bill on time. As a cardmember he has access to his credit score, as well as resources to monitor his credit. The Discover Student credit card offers 5% cash back on rotating categories (restaurants, clothing stores, movies, groceries), plus up to 1% cash back on other purchases. He can redeem points for account credit or gift cards.
If your student has poor money management skills, this may not be the best time for him to have a credit card. Missed payments and high credit card balances can harm his credit score. Start him with a prepaid credit card. There is no credit check and anyone can purchase and load cash onto a prepaid Visa or MasterCard. Getting this type of credit card for your student can help you child learn credit management and budgeting skills, which will prepare him for an unsecured credit card.